UK December flash services PMI 51.4 vs 51.0 expected

• Services PMI 51.4 vs 51.0 expected and 50.8 prior.
• Manufacturing PMI 47.3 vs 48.2 expected and 48.0 prior.
• Composite PMI 50.5 vs 50.7 expected and 50.5 prior.

Key Findings:

• Flash UK PMI Composite Output Index(1)
  : 50.5 (Nov: 50.5).
  Unchanged.
• Flash UK Services PMI Business Activity Index (2) : 51.4
  (Nov: 50.4). 2-month high.
• Flash UK Manufacturing Output Index (3) : 45.7 (Nov: 48.3).
  11-month low.
• Flash UK Manufacturing PMI (4) : 47.3 (Nov: 48.0). 11-
  month low.

Comment:

Commenting on the flash PMI data, Chris Williamson,
Chief Business Economist at S&P Global Market
Intelligence said:

Businesses are reporting a triple whammy of gloomy
news as 2024 comes to a close, with economic growth
stalled, employment slumping and inflation back on the
rise.

Economic growth momentum has been lost since the
robust expansion seen earlier in the year, as businesses
and households have responded negatively to the new
Labour government’s downbeat rhetoric and policies.
Business confidence has sunk to a two-year low as
companies weigh up a tougher outlook for sales
alongside rising costs, notably for staff as a result of
changes announced in the Budget. The survey’s price
gauges are indicating that inflation is turning higher
again.

Firms are responding to the increase in National
Insurance contributions and new regulations around
staffing with a marked pull-back in hiring, causing
employment to fall in December at the fastest rate since
the global financial crisis in 2009 if the pandemic is
excluded.

While the December PMI is indicative of the economy
more or less stalled in the fourth quarter, the loss of
confidence and increased culling of jobs hints at worse
to come as we head into the new year. Policymakers at
the Bank of England may be cautious about cutting
interest rates, however, given the resurgence of inflation
being signalled, adding further to downturn risks in
2025.”

This article was written by Giuseppe Dellamotta at www.forexlive.com.