The latest survey from S&P Global/CIPS showed that business activity in the private sector fell sharply in November, reaching its lowest level since October 2023 and moving into contraction territory. In addition, new order growth eased to its lowest for one year amid widespread reports of fragile business confidence.
The UK composite PMI fell to 49.9 points from 51.8 points in October. Consensus estimates suggested that the index will remain unchanged. The index dropped below the 50-point mark, indicating a contraction in activity, for the first time in 13 months. The services PMI dropped to 50.0 points (13-month low) from 52.0 points in October, while the manufacturing PMI fell to 48.6 points (9-month low) from 49.9 points. Economists had expected the services PMI to remain at 52.0 points and the manufacturing PMI to rise to 50.0 points.
Data showed that new orders in the private sector grew at the weakest pace since the current phase of expansion began in December 2023. Service providers mostly cited headwinds from subdued business confidence and caution among clients in the wake of the Autumn Budget. Lower sales in the manufacturing sector were commonly linked to weaker global economic conditions, reduced capital spending, and intense competition in export markets. Backlogs of work across the private sector economy decreased for the nineteenth consecutive month, which often reflected sufficient spare capacity amid a softer rate of new business expansion. Meanwhile, total private sector employment declined again in November, albeit only marginally. Business activity expectations for the year ahead declined again, reaching the lowest level since December 2022, largely due to a significant slide in service sector confidence. As for the inflationary situation in the private sector, average cost burdens increased at a robust and accelerated pace in November, while the latest rise in average prices charged by private sector firms was the slowest since February 2021.