The British private sector output in November recorded sharpest fall since May 2020, driven by the fastest reduction in service sector output since May amid temporary business closures among leisure and hospitality companies under new lockdown restrictions, a survey showed Monday.
The Flash UK Composite Output Index, which is based on approximately 85 percent of usual monthly replies, dropped from 52.1 in October to 47.4 in November and pointed to the sharpest downturn in overall business activity since May, according to the survey published by the IHS MARKIT/CIPS.
“A double-dip is indicated by the November survey data, with lockdown measures once again causing business activity to collapse across large swathes of the economy,” said Chris Williamson, chief business economist at IHS Markit, a London-based global information provider.
Early indicator revealed that the purchasing managers’ index (PMI) for the service sector plunged to 45.8 in November, dropping sharply from 51.4 in October, below the neutral 50.0 mark for the first time since June this year.
In contrast, the PMI for manufacturing sector rose to 55.2 in November, up from 53.7 in October and the highest since August 2020, figures unveiled.
“With the biggest drop in private sector output since May, the end of the year unveils the different fates of the manufacturing and services sector as a result of continuing COVID restrictions,” said Duncan Brock, group director at CIPS, a UK-based global procurement and supply organisation.
“Where manufacturing had a flat out month with the highest level of growth since September, the dominant services sector took another sudden tumble into contraction territory, resulting in deeps concerns for the health of the UK economy,” Brock added.
Despite a blow in business activity, the surveyed firms voiced optimistic sentiment toward the year ahead as a string of vaccine trails from countries, including Britain, China and the United States, were announced to be highly effective.
“Improved prospects for the year ahead are thanks mainly to the news of successful vaccine trials, which at last provides a light at the end of the tunnel for many businesses,” Williamson said.
Brock said although news around vaccines is uplifting optimism for business, service sectors are still “shedding jobs at a head-spinning rate, the New Year will be difficult as another recession waits on the doorstep”.