Aug sees further slowdown in UK business activity: S&P Global, CIPS

UK manufacturers signalled a sharp and accelerated fall in production during August, with the rate of reduction the quickest seen since May 2020. Reduced customer demand, the delayed delivery of inputs and labour shortages all weighed on performance.

The loss of momentum was linked to relatively muted customer demand as well as shortages of both labour and inputs, S&P Global said in a note.

Softer demand conditions led to a renewed drop in outstanding business, while employment expanded at the slowest rate for 17 months.

On a brighter note, inflationary pressures moderated again in August, albeit remaining sharp overall. At 50.9 in August, the headline seasonally adjusted S&P Global-CIPS flash UK composite output index fell from 52.1 in July to signal an expansion of business activity for the eighteenth successive month.

The rate of growth was the slowest seen over this period and only marginal. The drop in the headline index was largely driven by a faster decline in manufacturing output (index at 42.4), as services activity growth eased only slightly (52.5).

Average prices charged by UK firms also rose at a softer pace in August, with the rate of inflation edging down to a seven-month low. Companies often mentioned that intense market competition and efforts to attract new work had limited overall pricing power, S&P Global said.

Optimism around the 12-month outlook for output remained relatively subdued in August, with the overall degree of positive sentiment staying only slightly above June’s 25-month low.

Fibre2Fashion News Desk (DS)