Outlook is ‘gloomy’ as signs show economy in recession
ECONOMIC activity has fallen for a fourth consecutive month according to a series of indicators, adding to growing signs that Britain is already in recession.
The preliminary S&P/CIPS composite purchasing managers index (PMI) score for the manufacturing and services sectors in November was 48.3, marginally up from 48.2 in October.A PMI score above 50 indicated growth, while a score below suggests that an economy is shrinking.
Manufacturing is declining at a faster rate than services according to S&P, which added that companies reported that overall volumes of new work fell for a fourth month in a row and that the rate of decline is the fastest seen since January 2021. Additionally, it said that manufacturers have seen the sharpest drop in export orders since May 2020.
A recession is defined as two consecutive quarters of an economy shrinking.As GDP fell in the third quarter by 0.2 per cent and the PMI scores for October and November were negative, S&P chief business economist Chris Williamson said that the UK is most likely already in recession and that it will intensify in the New Year. He added: “Forward-looking indicators, notably an increasingly steep drop in demand for goods and services, suggest the downturn will deepen.
“While the change of Government has resulted in improved business confidence, the mood remains among the gloomiest seen over the past quarter century amid the numerous headwinds, which include the cost of living crisis, the Ukraine war, steepening export losses, higher borrowing costs, fiscal tightening and political uncertainty.”
Despite the tough economic environment, 63 per cent of shoppers plan to spend the same amount of money on Christmas as they did last year, said market researchers NielsenIQ.
On the other hand, 27 per cent plan to cut their spending, while 10 per cent actually plan to spend more.
Alwyn Venter, of NielsenIQ said that in the face of rising prices, most Britons are looking to snap up bargains or special offers to ensure they do not curtail their Christmas celebrations. He added: “The majority do not want to give up the usual traditions and spoil themselves and their loved ones with gifts and good food.”