UK business output contracts in November
By Michele Maatouk
Date: Friday 22 Nov 2024
(Sharecast News) - UK business output contracted in November for the first time in more than a year, according to a survey released on Friday.
S&P Global's flash UK composite output index - which measures activity in both the manufacturing and services sectors - fell to 49.9 from 51.8 in October. This marked the lowest level since October 2023 and was below the 50.0 mark that separates contraction from expansion.
The flash manufacturing purchasing managers' index declined to 48.6 in November from 49.9 the month before, hitting a nine-month low.
Meanwhile, the services PMI business activity index printed at 50.0, versus 52.0 in September. This was a 13-month low.
Chris Williamson, chief business economist at S&P Global Market Intelligence said: "The first survey on the health of the economy after the Budget makes for gloomy reading. Businesses have reported falling output for the first time in just over a year while employment has now been cut for two consecutive months. Although only marginal, the downturns in output and hiring represent marked contrasts to the robust growth rates seen back in the summer and are accompanied by deepening concern about prospects for the year ahead.
"Business optimism has slumped sharply since the General Election, dropping further in November to hit the lowest since late 2022. Companies are giving a clear 'thumbs down' to the policies announced in the Budget, especially the planned increase in employers' National Insurance contributions.
"The November PMI is indicative of the economy slipping into a modest decline, with GDP dropping at a 0.1% quarterly rate, but the loss of confidence hints at worse to come - including further job losses - unless sentiment revives."
On the upside, Williamson noted that inflation pressures have moderated further, with selling prices rising at the slowest rate seen this side of the pandemic.
"However, still-elevated rates of wage-related price and cost growth are being recorded in the service sector, potentially limiting scope for rate cuts among the more hawkish policymakers," he added.
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