Rolling news coverage of markets, economics and business as purchasing managers indices show economy in decline
- British economy: Services and composite PMIs lowest since Brexit vote
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- European Central Bank head calls for ‘new European policy mix’
Thomas Pugh, a UK economist at Capital Economics, said the PMI data were consistent with a fall of 0.3% in UK GDP during the final three months of the year.
The first set of regular flash PMIs for the UK will only stoke fears that the economy is heading for a further slowdown at the end of the year. Indeed, even though we think that the PMIs are probably overstating the weakness in the economy a bit, the downturn in the services PMI is especially worrying.
The services sector has been the stalwart of growth over the last year, but this may be a sign that the weakness in the rest of the economy is starting to creep into the economy’s largest sector.
A caveat on the PMI data: because the early “flash” version only covers about 85% of the companies surveyed it can be revised when the final reading comes out.
Either way, it is not a picture of strength, and the Bank of England’s monetary policymakers will surely be thinking very hard about whether to respond to weak growth.
Doesn’t look too good for the UK economy right now! PMI composite has fallen further below 50 signalling a GDP contraction in Q4! #Brexit uncertainty
We expect Bank of England to deliver a cut in January! pic.twitter.com/FPqg7jP6EM