UK economy recession risks on the rise as S&P Global indicates decline in activity
The UK economy is likely to contract again in December as expansion in services sector cannot fully offset the decline in manufacturing.
The S&P Global Composite Purchasing Managers Index edged up slightly to 49.0 from 48.2 in November, but remained below the 50 level that usually separates a rise from a decline for the fifth month in a row.
December data raises the possibility that the UK is in recession, with PMI pointing to a 0.3% GDP contraction in the fourth quarter, following a 0.2% decline seen in the three months to September. The services PMI, which covers most economic activity, rebounded to 50.0 from 48.8 in November, but the manufacturing PMI fell to 44.7 - its lowest level since June 2020 - from 46. 5.
S&P saw a "hard and accelerated" fall in manufacturing employment as new export orders fell for the sixth month in a row. Employment in the service sector has stalled.
Forward-looking elements of the survey, such as business confidence and order books, remain low by historical standards, both of which are key indicators of increased levels of economic stress.
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