Sunday, March 26, 2023

UK heading for double-dip recession this winter: PMI By Reuters


© Reuters. FILE PHOTO: Canary Wharf business district in London

By David Milliken

LONDON (Reuters) – Britain looks on course to enter a double-dip recession this winter, as business surveys show economic growth almost halted last month even before the latest England-wide lockdown was announced, financial data company IHS Markit said.

The IHS Markit/CIPS services Purchasing Managers’ Index (PMI) fell to a four-month low of 51.4 in October from 56.1 in September, closer to the 50 mark that represents zero growth than an initial reading of 52.3.

The composite PMI, which includes stronger manufacturing data released on Monday, sank to 52.1 from 56.5, also weaker than the initial ‘flash’ estimate.

“October data indicates that the UK service sector was close to stalling even before the announcement of lockdown 2 in England,” IHS Markit economist Tim Moore said.

“The UK economy seems on course for a double-dip recession this winter and a far more challenging path to recovery in 2021,” he added.

The new orders component in the services PMI fell sharply, and businesses shed jobs for the eighth month in a row.

From Thursday all non-essential shops, pubs and restaurants in England will close for four weeks, except where they serve takeaway food.

The restrictions are less wide-ranging than in March and April, but some economists have predicted output in November will fall by as much as 10%, reducing output for the fourth quarter by around 3%.

British gross domestic product slumped by 20% during the longer lockdown in the second quarter of 2020, the biggest decline of any major advanced economy.

The Bank of England looks set to launch another round of bond purchases on Thursday and downgrade its economic forecasts from those it gave in August, when it predicted GDP would be back to pre-crisis levels by the end of 2021.

Since then, COVID-19 cases have risen sharply in Britain and elsewhere in Europe, and Britain’s government fears hospitals will be overwhelmed if it cannot slow the disease’s spread.

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