- Prior 51.5
- Manufacturing PMI 42.5 vs 45.0 expected
- Prior 45.3
- Composite PMI 47.9 vs 50.3 expected
- Prior 50.8
From one troubled economy to another, these are some poor PMI readings for the UK in August. The services sector is seen slumping into contraction territory and that is adding to the recession in the manufacturing sector at the moment across the region. It was a short-lived expansion (just six months) for the UK economy as the composite reading falls to its weakest in 31 months now. S&P Global notes that:
“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.
“A renewed contraction of the economy already looks inevitable, as an increasingly severe manufacturing downturn is accompanied by a further faltering of the service sector's spring revival. The survey is indicative of GDP declining by 0.2% over the third quarter so far.
“Companies are reporting reduced orders for goods and services as demand is increasingly hit by the cost-of-living crisis, higher interest rates, export losses and concerns about the economic outlook.
“Although cost pressures remain elevated, thanks mainly to rising wages, the deteriorating demand environment is curbing companies' pricing power. Prices charged for goods and services are growing at rate commensurate with consumer price inflation cooling to 4% in the months ahead. A further pull-back in hiring in August meanwhile indicates that the labour market is losing steam, which should feed through to lower wage pressures.
“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.”