- After three months of contraction, British companies saw a slight recovery.
- For the first time since July, the UK’s PMI for Q4 2023 was above the 50 threshold for growth
- The Confederation of British Industry’s separate survey revealed the largest decline in factory orders since January 2021.
An order decline persisted despite higher interest rates and weak demand, according to a survey released on Thursday, even though British companies reported a slight return to growth in November following three months of decline.
The preliminary November reading of the S&P Global/CIPS UK Composite Purchasing Managers’ Index (PMI), which covers manufacturing and service companies, was 50.1. This came one day after Finance Minister Jeremy Hunt announced steps to strengthen the nation’s sluggish economic growth.
UK companies
For the first time since July, the UK’s PMI for Q4 2023 was above the 50 threshold for growth, at 48.7. Comparing this reading to the previous one of 48.7, which Reuters had predicted, showed a significant increase.
The Bank of England has warned that inflation may be more persistent than anticipated, but has kept interest rates on hold at its last two meetings following 14 consecutive increases. In its most recent two meetings, the Bank of England has also decided to hold interest rates after 14 consecutive increases.
While the PMI for the manufacturing sector was 46.7, a six-month high but still indicating a decline in output, it was positive at 50.5 for the services sector.
The Confederation of British Industry’s separate survey revealed the largest decline in factory orders since January 2021. The respondents to S&P’s survey observed “strong” wage growth and a slight increase in input cost inflation, which increased their average prices.
Although businesses expressed greater optimism about the upcoming year, indicators pointed to the likelihood that recession risks would remain high in the coming year.
The Eurozone PMI, which was made public earlier on Thursday, indicated that although the region’s recession had somewhat abated in November, the bloc’s economy was still expected to contract this quarter.
