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United Kingdom PMI August 2023

United Kingdom: Private-sector operating conditions deteriorate in August

The S&P Global/CIPS Flash Composite Purchasing Managers’ Index (PMI) came in at 47.9 in August, down from July’s 50.8. August’s result marked the weakest reading since January 2021. Consequently, the index dropped below the 50.0 no-change mark, signaling a deterioration in private sector operating conditions from the previous month.

The Manufacturing PMI stood at 42.5 in August, down from July’s 45.3, while the services PMI activity index fell to 48.7 in August (July: 51.5). Across the private sector as a whole, the decline in new orders was the sharpest since November 2022, while employment growth slowed, input and output cost inflation ebbed, and business sentiment was the weakest since last December.

Dr John Glen, CIPS chief economist, said:

“High interest rates continue to cast a shadow over the UK economy, creating a lull in new orders, stunting output, and ensuring prospects for the private sector remain uncertain. This reduction in activity has provided UK supply chains with much-needed respite after the instability of the last two years. […] The hope is that more predictable supply chains will help to stabilise the economy and support an eventual rebound in new orders. However, the question remains as to how long elevated borrowing costs will limit demand.”

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