Economic Buzz: UK private sector output expands at slowest pace since May
Subdued demand and pressure on margins from sharply rising input costs contributed to another reduction in private sector employment numbers. Moreover, business activity expectations for the year ahead eased to a three-month low in September, with survey respondents widely commenting on weak client confidence alongside heightened political and economic uncertainty.
At 51.0 in September, the headline seasonally adjusted S&P Global Flash UK PMI Composite Output Index eased markedly from August's 12-month high of 53.5. The headline index has posted above the crucial 50.0 no-change value in each month since May. Higher levels of service sector activity once again contrasted with cutbacks to manufacturing production.
Service providers typically noted rising business and consumer spending, albeit with growth constrained by lacklustre UK economic conditions and elevated geopolitical uncertainty. The latest decline in manufacturing output was the fastest since March, with survey respondents mostly citing weak order books from both domestic and export markets.
New work received by UK private sector firms increased only marginally, as the rate of expansion moderated since August amid weaker growth across the service economy.
Unfinished work was depleted in both the manufacturing and service sectors during September, which extended the current period of falling backlogs to 29 months.
September data indicated another sharp increase in average cost burdens across the private sector economy. Service sector firms recorded a solid rise in their prices charged in September, with the rate of inflation only slightly lower than seen on average in the year-to-date.
Looking ahead, private sector firms remain upbeat overall about their growth prospects during the next 12 months. The degree of confidence slipped to its lowest since June, reflecting falling optimism across the service economy.
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