UK PMI Manufacturing fell from 45.3 to 41.5 in August, a 39-month low, and missed expectation of 45.1. PMI Services fell from 51.5 to 48.7, a 7-month low, below expectation of 50.8. PMI Composite fell from 50.8 to 47.9, a 31-month low, and first contraction since January.
Chris Williamson, S&P Global Market Intelligence’s Chief Business Economist, commented on the data’s implications: “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.
The numbers tell a story of a stalling economy. The service sector’s earlier signs of rejuvenation are waning, and the manufacturing sector’s decline is becoming more pronounced. Williamson added that the data suggests a -0.2% contraction in GDP for Q3.”
He also alluded to the broader monetary implications, noting, “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.”