Breaking News
Investing Pro 0
Free Webinar - Crude Oil Trading 2023 | Thursday, February 9, 2023 | 01:00PM PST Enroll Now

Political chaos tips British firms into deeper slide - PMIs

Economy Oct 24, 2022 06:20AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Shoppers walk next to the clubcard price branding inside a branch of a Tesco Extra Supermarket in London, Britain, February 10, 2022. Picture taken February 10, 2022. REUTERS/Paul Childs
 
SPGI
-1.42%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

LONDON (Reuters) -British businesses are suffering their worst month since January 2021, when they were under a COVID-19 lockdown, as the country's political upheavals compound concerns about inflation and rising interest rates, a survey showed on Monday.

The S&P Global/CIPS flash Composite Purchasing Managers' Index (PMI) showed a contraction in activity for a third month in a row, sinking to a 21-month low of 47.2 from September's 49.1 and signalling Britain's economy could be on course for a potentially deep recession.

Economists polled by Reuters had expected a reading of 48.1.

The services sector PMI contracted for the first time in 20 months, falling to 47.5 from the no-change level of 50.0 in September.

Political and economic uncertainty pushed overall activity down at a pace unseen since the global financial crisis in 2009, excluding pandemic lockdown periods, Chris Williamson, chief business economist at S&P Global (NYSE:SPGI) Market Intelligence, said.

Other countries are also struggling with soaring energy prices. German business activity declined at a faster rate than in Britain, although France fared better than both.

The British figures suggest the Bank of England will raise interest rates by 0.75 percentage point on Nov. 3 rather than a full point as some investors had predicted, Martin Beck, chief economic adviser to the EY ITEM Club consultancy, said.

"More evidence of economic weakness, combined with signs of less heated inflationary pressures, should, all else equal, tone down the (BoE's) appetite to raise interest rates substantially in its November meeting," Beck said.

British business confidence also fell to levels rarely seen in the survey's 25-year history, showing the impact on firms from the chaotic period after Prime Minister Liz Truss's government announced unfunded tax cuts in late September that triggered a bond market rout and were eventually reversed.

Truss has said she will resign once her successor is chosen at the end of this week.

"As night follows day, investment and employment will suffer in the months ahead as companies adjust to the increasingly challenging environment," Williamson said. "Hiring is already slowing sharply, with manufacturing now even shedding workers."

Although price pressures weakened, the fall in the value of the pound and high energy costs meant input cost inflation was still higher than at any time prior to the pandemic, and the Bank of England was likely keep on raising interest rates, he said.

"On top of the collapse in political stability, financial market stress and slump in confidence, these higher borrowing costs will add to speculation of a worryingly deep UK recession," Williamson said.

New orders fell at the sharpest pace since January 2021.

New British finance minister Jeremy Hunt is due to announce a medium-term budget plan on Oct. 31 likely to include spending cuts and possibly tax increases that could aggravate the expected recession.

Political chaos tips British firms into deeper slide - PMIs
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email