United Kingdom: Economy loses further momentum in October
September 23, 2020
The IHS Markit/CIPS UK services Purchasing Managers’ Index (PMI) fell from 56.1 in September to 52.3 in October, while the manufacturing PMI decreased from 54.1 in September to 53.3 in October. The falls came amid further restrictions to stem the surge in domestic Covid-19 cases, and suggest weakening economic momentum heading into the final quarter of the year. However, both indices remained above the 50-threshold separating worsening and improving operating conditions.
While output rose, new orders declined on weaker new business in the services sector. Firms continued to cut staff numbers in October in both the manufacturing and services sectors, while business optimism was the weakest since May.
Chris Williamson, chief business economist at IHS Markit, stated:
"The slower growth of output, the renewed fall in demand and further deterioration in the labour market suggest the economy started the fourth quarter on a weakened footing. While Brexit preparations may cause a short-term boost to some parts of the economy ahead of 31st December, rising Covid-19 cases and the imposition of local lockdown measures bode ill for the near-term economic outlook. While the fourth quarter still looks likely to see the economy expand, the rate of growth looks to have slowed sharply and the risk of a renewed downturn has risen."