United Kingdom: Services and manufacturing PMIs recover slightly in October
The IHS Markit/CIPS UK services Purchasing Managers’ Index (PMI) increased from 49.5 in September to 50.0 in October, reaching the threshold that separates expansion from contraction in activity. It should be noted that the services PMI does not cover certain subsectors such as retail, education and health, meaning the PMI does not reflect the services sector in its entirety—this likely explains in part why the service sector has continued to expand moderately according to GDP data, despite recent depressed PMI readings.
In October, new orders, exports and employment continued to decline, although the fall in employment was softer than in the prior month. Input price inflation eased, while output price inflation was soft amid intense competition.
The IHS Markit/CIPS manufacturing PMI ticked up from 48.3 in September to 49.6 in October, but remained below the 50-threshold, indicating a contraction in the sector. Output, new orders and employment declined further, although exports rebounded as EU customers front-loaded purchases ahead of a potential no-deal Brexit on 31 October. Brexit concerns also led to some stockpiling, albeit below the record rates observed in Q1. Input and output price pressures were moderate.
Regarding the service sector, Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, commented: “The sector’s main difficulties are largely of Brexit’s making and with another deadline comes more indecision and delay. […] Companies are waiting for a resolution by the UK Government to salvage the current situation so workflows can begin again at healthier levels.”