- Prior 51.5
- Manufacturing PMI 42.5 vs 45.0 expected
- Prior 45.3
- Composite PMI 47.9 vs 50.3 expected
- Prior 50.8
From one troubled economy to another, these are some poor PMI readings for the UK in August. The services sector is seen slumping into contraction territory and that is adding to the recession in the manufacturing sector at the moment across the region. It was a short-lived expansion (just six months) for the UK economy as the composite reading falls to its weakest in 31 months now. S&P Global notes that:
“The early PMI survey for August suggests that inflation
should moderate further in the months ahead, but also
indicates that the fight against inflation is carrying a heavy
cost in terms of heightened recession risks.
“A renewed contraction of the economy already looks
inevitable, as an increasingly severe manufacturing
downturn is accompanied by a further faltering of the
service sector’s spring revival. The survey is indicative of
GDP declining by 0.2% over the third quarter so far.
“Companies are reporting reduced orders for goods and
services as demand is increasingly hit by the cost-of-living
crisis, higher interest rates, export losses and concerns
about the economic outlook.
“Although cost pressures remain elevated, thanks mainly
to rising wages, the deteriorating demand environment is
curbing companies’ pricing power. Prices charged for
goods and services are growing at rate commensurate
with consumer price inflation cooling to 4% in the months
ahead. A further pull-back in hiring in August meanwhile
indicates that the labour market is losing steam, which
should feed through to lower wage pressures.
“While a further hike in interest rates in September looks
to be on the cards, the August PMI data will add to
speculation that rates could soon peak.”
