By Ian McConnell
THE UK private sector economy is suffering a renewed fall in output this month, with services activity declining at its fastest pace since May amid temporary closures in the hospitality and leisure sectors arising from coronavirus-related restrictions.
Hospitality and leisure venues across England closed as Prime Minister Boris Johnson implemented a renewed lockdown from November 5.
In contrast to services, manufacturing growth has been robust in November and has accelerated since last month, according to the latest monthly survey of private sector activity published yesterday by the Chartered Institute of Procurement & Supply and financial information company IHS Markit.
The survey flagged stockpiling by manufacturers ahead of the December 31 end of the transition period which has kept the UK in the European single market. With little more than one month to go before the single-market exit, there remains uncertainty over whether or not the UK will secure the relatively narrow free trade agreement it is seeking with the European Union.
CIPS and IHS Markit said: “The...survey...pointed to a sharp lengthening of supplier delivery times amid severe delays at UK ports, alongside a robust degree of stock-building as manufacturers sought to accumulate critical inputs before the end of the Brexit transition period.”
The CIPS/IHS Markit flash UK composite output index, which covers manufacturing and services, has fallen to a six-month low of 47.4 in November, from 52.1 in October, on a seasonally adjusted basis. This fall below the 50 no-change mark signals the end of a four-month run of expansion.
The flash services business activity index has dropped to 45.8 this month, from 51.4 in October. The flash manufacturing output index has risen to 56.3 in November, from 55.8 last month.
CIPS and IHS Markit said: “Business activity across the UK private sector decreased in November. The downturn was driven by the fastest reduction in service sector output since May amid temporary business closures among leisure and hospitality companies. In contrast, manufacturing production expanded at a robust pace during November.”
Accountancy firm PricewaterhouseCoopers forecasts today that the UK economy will, over November, shrink by 5.7 per cent.
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