UK businesses slip into deepest downturn since 2016 in Nov - flash PMIs

[snoop1130 4,751]

UK businesses slip into deepest downturn since 2016 in Nov - flash PMIs

By Andy Bruce

 

FILE PHOTO: People walk through the Canary Wharf financial district of London, Britain, December 7, 2018. REUTERS/Simon Dawson

 

LONDON (Reuters) - British business suffered its deepest downturn since mid-2016 this month as the approach of a national election exacerbated uncertainty about Brexit, according to a survey which augured badly for the economy.

 

The first “flash” early reading of the IHS Markit/CIPS UK Purchasing Managers’ Indexes (PMI) for Britain showed on Friday that the decline in both the services and manufacturing sectors has quickened in November.

 

The readings suggested the world’s fifth-biggest economy is contracting at a quarterly pace of 0.2%, IHS Markit said, although the PMIs have overstated economic weakness recently, in part because of higher government spending ahead of Brexit.

 

Sterling fell to a nine-day low against the euro after the data and bond prices extended a rally that took 10-year yields down 5 basis points on the day.

 

Some economists said the survey weakness could be due to broader concerns about political uncertainty, rather than an outright fall in economic output.

 

“Markit’s survey has been excessively influenced by general concerns among businesses about the Brexit and political outlook and so has become a poor indicator of day-to-day economic activity,” Pantheon Macroeconomics’s Samuel Tombs said.

 

“Those concerns likely have only intensified since the general election campaign kicked off.”

 

The two main political parties contesting the Dec. 12 vote offer contrasting plans for the world’s fifth-largest economy.

 

Prime Minister Boris Johnson’s Conservatives promise to deliver Brexit, while Labour says it wants to be the most radical socialist government in British history.

 

Addressing a wilting British economy — which has also been hit by the slowdown in the world economy caused by the U.S.-China trade war — is likely to be among the first items in the next government’s in-tray.

 

“The PMI surveys are not only warning that the underlying trend in the economy is deteriorating markedly, but also that the labour market is cooling,” said Chris Williamson, chief business economist at survey compiler IHS Markit.

 

The PMI for the dominant services sector fell to 48.6 in November from 50.0 in October, its lowest level since July 2016, just after the Brexit vote.

 

Readings below 50 denote contraction.

 

The manufacturing PMI dropped to 48.3 from 49.6 as a stockpiling drive before the aborted Oct. 31 Brexit deadline evaporated.

 

The survey, closely watched at the Bank of England, adds weight to the views of two of its nine monetary policymakers who earlier this month voted for an interest rate cut.

 

The composite PMI, which combines the services business activity and services and manufacturing output readings, fell to 48.5 from 50.0, also its lowest level since July 2016.

 

In a bleak sign for coming months, backlogs of work declined at the fastest rate since 2012.

 

The final PMI readings for the manufacturing and services sectors will be published on Dec. 2 and Dec. 4 respectively.

 

Data show an average difference of 0.7 points in absolute terms between the “flash” and final versions of the UK composite PMI, compared with 0.2 points for the euro zone.

 

-- © Copyright Reuters 2019-11-22

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[fishtank 1,978]

The threat of leaving the EU is the cause.

Needs reversing as soon as possible.

No doubt about that.

Edited November 22 by fishtank

[Dumbastheycome 2,357]

Even though "as of the  moment" most  bisnis operates as  much as possible under  current EU participation  when/if   departure becomes a reality  then  the shutters will inevitably  come down on the majority of those  that  sustain the economy. The  little people. Austerity will be a popular  name  for children.

[ivor bigun 2,722]

Once the election is won with a large Tory majority ,then we will leave the E.U and prosper.

[kingdong 1,649]

26 minutes ago, fishtank said:

The threat of leaving the EU is the cause.

Needs reversing as soon as possible.

No doubt about that.

Nothing to do with the pending election and the chance of Corbyn getting in?when we leave watch the eu go down the gurgler.

[Denim 9,531]

Well, I'm thinking of giving it a try. If it will really make sex last at least 2 hours I feel I should at least try it once.

 

Don't know what the rest of the thread is about but cartoons of sex must have something to do with it.

[soalbundy 16,372]

11 hours ago, ivor bigun said:

Once the election is won with a large Tory majority ,then we will leave the E.U and prosper.

I've had dreams similar to that but I still haven't won the lottery in real life.

[soalbundy 16,372]

11 hours ago, kingdong said:

Nothing to do with the pending election and the chance of Corbyn getting in?when we leave watch the eu go down the gurgler.

how often has the demise of the EU been prophesied and yet here we are, the pound still measures itself against the Euro and Dollar, not the other way round. The Eu is still growing albeit at a very slow rate but it isn't stagnating and the German economy has just picked up again, get rid of Trump and the EU will soar again while the UK will still be whimpering about the 'special relationship'.

[JAG 23,251]

There is an election in less than a month. The two effective rivals for power have very different plans for managing the economy, short and long term. No one can be certain, at least not certain enough to want to risk hard cash, on what that election result may be. That may just be having some effect on these figures? 

 

I'm not suggesting that everything in the garden will be rosy, no matter which side wins, but until the morning of Friday the 13th of December (!) no-one really knows what the future might hold.

[sawadee1947 2,761]

That was to expect. Not surprising. 

And it will go on and on...... like the Titanic