UK economic downturn deepens in October
By Michele Maatouk
Date: Monday 24 Oct 2022
(Sharecast News) - The UK economic downturn deepened in October, according to a survey released on Monday, with business activity down to its lowest level since January 2021.
The flash S&P Global/CIPS composite purchasing managers' index - which measures activity in the services and manufacturing sectors - fell to 47.2 from 49.1 in September. This was below consensus expectations for a reading of 48.0 and the 50.0 mark that separates contraction from expansion.
The manufacturing PMI declined to 45.8 in October from 48.4 in September, hitting a 29-month low and coming in below consensus expectations of 48.0.
Meanwhile, the PMI for the services sector fell to a 21-month low of 47.5 from 50.0. This was also below expectations of 48.0.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said: "October's flash PMI data showed the pace of economic decline gathering momentum after the recent political and financial market upheavals. The heightened political and economic uncertainty has caused business activity to fall at a rate not seen since the global financial crisis in 2009 if pandemic lockdown months are excluded. GDP therefore looks certain to fall in the fourth quarter after a likely third quarter contraction, meaning the UK is in recession.
"While the economic downturn has led to reduced upward pressure on prices, the weak pound and high energy costs meant that input cost inflation remains higher than at any time in the survey's history prior to the pandemic.
"The resulting elevated, albeit easing, price pressures look set to drive the Bank of England into further aggressive interest rate hikes. On top of the collapse in political stability, financial market stress and slump in confidence, these higher borrowing costs will add to speculation of a worryingly deep UK recession."
Capital Economics said: "Overall, the composite flash PMI provides further evidence that the economy is heading into recession. But with domestic inflationary pressures remaining strong, the Bank of England will have little choice but to continue raising interest rates, from 2.25% now to a peak of 5.00%."
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN