The United Kingdom’s (UK) business activity fell in September at the fastest rate since January 2021, as cost pressures remain high and demand wanes, a survey showed Friday.
The S&P Global / CIPS Flash UK PMI Composite Output Index slipped to 48.4 from 49.6 in August, hitting a 20-month low and pointing to a further decline in UK private sector output.
Falling business activity indicates that the economy is likely in recession, said Chris Williamson, chief business economist at S&P Global Market Intelligence.
Companies reported the rising cost of living, linked to the energy crisis, and growing concerns about the outlook are subduing demand and hitting output levels to an extent not seen since 2009, barring the COVID-19 pandemic lockdowns and initial 2016 Brexit referendum shock, Williamson added.
Forward-looking indicators have also deteriorated further in September. Goods producers noted the sharpest drop in foreign demand for 28 months and services companies signaled the first reduction since December 2021.
Meanwhile, UK private sector firms expressed reduced optimism towards the 12-month outlook for business activity as the overall level of positive sentiment was the lowest seen since May 2020.
Fears of a UK recession, reduced consumer spending, rising costs and interest rate hikes all weighed on company projections for the year ahead, according to the survey.
As the latest business surveys showed economic weakness, the Bank of England said on Thursday it expected the UK economy to shrink by 0.1 percent in the third quarter, a second successive quarterly decline. ■