United Kingdom: Service sector weakens markedly in November; manufacturing sector stays robust
The IHS Markit/CIPS UK services Purchasing Managers’ Index (PMI) fell from 51.4 in October to 45.8 in November, a six-month low. The fall came amid the reimposition of the national lockdown to stem the surge in domestic Covid-19 cases, which hit the leisure and hospitality sectors hard.
In contrast, the manufacturing PMI rose from 53.7 to 55.2. However, this increase was partly due to firms front-loading orders and increasing stockpiles, due to uncertainty over the UK’s future trading relationship with the EU after the Brexit transition period ends on 31 December. Moreover, there was a divergence in fortunes within the manufacturing sector: The intermediate and investment goods industries performed much better than consumer goods.
Chris Williamson, chief business economist at IHS Markit, stated:
“A double-dip is indicated by the November survey data, with lockdown measures once again causing business activity to collapse across large swathes of the economy. […] Some comfort comes from the data suggesting that the impact of the lockdown has not been as severe as in the spring, and manufacturing has also received a significant boost from inventory building and a surge in exports ahead of the UK’s departure from the EU at the end of the year, providing a fillip for many companies. However, while the lockdown will be temporary, so too will this pre-Brexit boost.”