24th Oct 2024 09:59
(Alliance News) - UK private sector growth slowed to a near one-year low in October, a preliminary reading said Thursday, due to "heightened economic uncertainty".
The flash UK composite purchasing managers' index fell to 51.7 points in October, from 52.6 in September. The reading remained above the 50 mark which separates growth from decline, though the PMI fell to an 11-month low.
S&P Global noted "anecdotal evidence" of some pre-budget uncertainty. The Labour government's first budget is announced next week Wednesday.
The composite data is calculated using readings of the services and manufacturing economies.
The flash services PMI also hit an 11-month low, declined to 51.8 points from September's final tally of 52.4. The manufacturing PMI faded to 50.3 points from 51.5, hitting a six-month low.
"October data pointed to a moderate increase in UK private sector output, but the rate of expansion slowed for the second month running to its lowest since November 2023. Survey respondents widely commented on the impact of delayed decision-making among clients and heightened economic uncertainty in October. Employment was a particularly weak spot, with overall staffing numbers decreasing for the first time in 2024 to date," S&P Global said.
"Private sector firms indicated another robust rise in their average prices charged. Moreover, the rate of prices charged inflation edged up to a three-month high. Cost pressures receded again, as the latest increase in average input prices was the slowest since November 2020."
S&P Global said there was a "wait-and-see approach" to spending decisions, hitting new business in October. The pace of new order growth abated to its slowest speed since June. There was also a divergence between services and manufacturing when it came to new orders.
S&P Global explained: "Resilient demand in the service economy contrasted with an outright decline in
new work received by manufacturing firms. Latest data also pointed to divergent export sales trends, with service providers signalling the fastest growth since March 2023 whereas goods producers indicated the sharpest decline in new work from abroad for eight months."
Optimism for the year ahead softened for the third month in a row and hit its lowest level since November of last year.
"Weaker growth projections were seen in both the manufacturing and service sectors in October,
with the former signalling the least upbeat sentiment for almost two years. Growth expectations were typically linked to planned business investment, hopes of a gradual improvement in economic conditions and forthcoming new product launches. However, survey respondents also widely suggested that heightened political uncertainty at home and abroad had weighed on business confidence," S&P Global added.
The PMI survey features a panel of 650 firms in each of manufacturing and services. Data for the flash reading includes the responses of around 80% to 90% of them.
Final October manufacturing is released on November 1, before the services and composite readings together on November 5.
By Eric Cunha, Alliance News news editor
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