UK PMI data for November reflects a significant improvement in economic activity. Manufacturing PMI rose from 44.8 to a six-month high of 46.7, exceeding the anticipated 45.0. Services PMI increased from 49.5 to a four-month high of 50.5, signaling a return to expansion and surpassing expectations of 49.5. Composite PMI, which amalgamates both sectors, also achieved a four-month high at 50.1, up from 48.7.
Tim Moore, Economics Director at S&P Global Market Intelligence, observed that the UK economy showed signs of stabilization. He noted, “The service sector arrested a three-month sequence of decline and manufacturers began to report less severe cutbacks to production schedules.” Moore attributed this recovery in part to a halt in interest rate hikes and a decrease in headline inflation rates. However, he cautioned that the data indicates a likely flat trend for GDP in Q4 2023.
Despite the uptick in PMI figures, Moore highlighted continuing recession risks. He pointed out that new order volumes decreased for the fifth consecutive month, reflecting limited sales opportunities. Additionally, business activity expectations remained low, close to October’s recent nadir, and significantly weaker compared to earlier in the year.
Inflation concerns are also evident, especially in the service sector. Moore mentioned that input cost pressures have risen for the first time in four months, with service providers particularly impacted by the need to pass increased staff costs onto customers.
