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UK November final services PMI 48.8 vs 48.8 prelim

  • Composite PMI 48.2 vs 48.3 prelim

Little change to the initial estimates as this just reaffirms the fastest fall in new business since January last year. Demand conditions continue to be hit hard amid the cost-of-living crisis and high inflation continues to be a problem for consumption activity. The outlook is bleak as a recession looms large in the UK. S&P Global notes that:

“A further economic contraction signalled by the PMI surveys hints at a growing recession risk for the UK. A change of government and its new economic policies may have helped arrested some of the financial market volatility after September’s ‘mini-budget’ but the economic picture remains stubbornly unchanged. The overall rate of economic contraction has held steady compared to October, indicative of GDP falling at a quarterly rate of 0.4%. As such, this is the toughest spell the UK economy has faced since the global financial crisis excluding only the height of the pandemic.

“Inflows of new work fell at an increased rate, indicating slumping demand for goods and services, forcing companies to pare back their hiring, resulting in only very modest employment growth. And, although business confidence in the outlook has lifted from October’s recent low, largely reflecting signs of improved political stability at home, an overall gloomy mood prevails to restrain business optimism at one of the lowest levels seen over the past decade. Clearly, risks to the near-term outlook remain tilted to the downside.

“While an easing of price pressures brought some tentative goods news to suggest inflation has peaked, rates of increase remain historically elevated both in terms of firms’ costs and their selling prices to hint at worryingly sticky price pressures.”

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