• Prior 50.9
  • Manufacturing PMI 48.5 vs 47.5 expected
  • Prior 47.3
  • Composite PMI 48.4 vs 49.0 expected
  • Prior 49.6

UK economic activity is seen declining at its quickest pace since January 2021, as cost pressures remain high and demand conditions wane. This arguably confirms that the economy is already in a (technical) recession and with the outlook staying rather bleak, it is tough to see how any of this is going to provide much comfort for the pound and BOE in the months ahead. S&P Global notes that:

“UK economic woes deepened in September as falling business activity indicates that the economy is likely in recession. Companies report that the rising cost of living, linked to the energy crisis, and growing concerns about the outlook are subduing demand and hitting output levels to an extent not seen since 2009, barring the pandemic lockdowns and initial 2016 Brexit referendum shock.

“Forward-looking indicators meanwhile deteriorated further in September. Both the new orders and future expectations gauges have descended to levels which have rarely been weaker in the past, and are consistent with a deepening downturn as we head into the fourth quarter.

“Inflationary pressures continue to run higher than at any time in over two decades of survey history prior to the pandemic. Renewed supply constraints, soaring energy prices and rising import costs associated with the weakened pound are adding to cost pressures, meaning the overall rate of inflation signalled will remain of great concern to policymakers at the Bank of England. However, the detrimental impact of tightening policy into a recession is becoming increasingly apparent, with the downturn likely to intensify as we head into winter.”