UK Nov Private Sector Activity Weakest Since July 2016, Flash PMIs Show

Marco Green
November 22, 2019

Business activity in the United Kingdom fell to its lowest level in November since after the referendum in July 2016 as Brexit uncertainty and the upcoming general election took their toll, according to data released on Friday.

Meanwhile, the manufacturing purchasing managers' index printed at a two-month low of 48.3, down from 49.6 in October and below expectations of 49.0. Economists polled by Reuters had given an average forecast for a reading of 52.8 points.

This left the composite index at a 40-month low of 48.3, down from 50.0 in October, IHS Markit said.

"Another solid expansion in private sector activity maintains the positive economic picture seen in France over the past few months".

Manufacturing remained the main area of weakness in November. On the whole, there was a narrower disparity in performance compared to the service sector, with a particularly positive result seen in new orders.

The market had been expecting a more modest fall to 48.8, from the 49.6 recorded in October. A reading below 50 indicates contraction in activity.

The decline was the worst since July, 2016, and survey respondents largely attributed the weaker domestic economic conditions to a lack of clarity in relation to Brexit, alongside a fresh injection of business uncertainty from the forthcoming general election on December 12, according to IHS Markit.

Chris Williamson, Chief Business Economist at IHS Markit, said the decline signaled by the flash PMI follows stagnation in October and puts the economy on course for a 0.2 percent drop in GDP in the fourth quarter.

IHS Markit said the data suggest the United Kingdom economy is on course for a 0.2% drop in gross domestic product in the fourth quarter. German Q3 GDP was also on tab today and confirmed at 0.1% q/q, as expected. "Smoothing out the Brexit-related distortions, we continue to see underlying United Kingdom quarterly growth running at 0.2% at present".

Other reports by Click Lancashire

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