UK PMI Manufacturing sector had a slight uptick in September, moving from 43.0 to 44.2, surpassing expectations set at 43.0. Services PMI disappointed, recording a drop from 49.5 to 47.2, underperforming against the forecasted 49.0, marking a 32-month low. Consequently, PMI Composite followed suit, declining from 48.6 to 46.8, also registering a 32-month low.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, stated, “The disappointing PMI survey results for September mean a recession is looking increasingly likely in the UK.”
The current PMI data aligns with a potential GDP contraction of over -0.4% on a quarterly basis. Williamson mentioned, “September’s downturn is the steepest since the height of the global financial crisis in early 2009 barring only the pandemic lockdown months.”
A significant point of apprehension in the inflation framework remains wage growth. However, with the survey indicating the most significant employment decline since 2009, wage negotiation leverage appears to be dwindling swiftly.
Williamson believes the unsettling indications of heightened recession risk coupled with diminishing inflationary pressures are likely to have “added to calls to halt rate hikes” by BoE.
