Growth in the UK’s most important sector is slowing down, sliding back to levels last seen two and a half years ago.
That’s according to Markit’s purchasing managers’ index (PMI) just out, which came in with a score of 53.3. That’s the slowest pace since all the way back in April 2013. Analysts were expecting the PMI to strengthen a little, up to 56 from 55.6 in August.
The PMI offers a snapshot of a sector for the month that’s just finished, well before any official economic data is released. It’s based on a poll of businesses, which tell Markit whether they’re seeing more or fewer orders, employing people or laying them off, and a number of other similar questions.
As long as the figure is over 50, there’s growth — so the UK doesn’t look like it’s heading into a recession or anything like that. But weaker figures mean weaker growth, and the UK is a services-dominated economy.
A figure of 53.3 indicates growth of just 0.3% in the third quarter, around half the pace the UK has been recording in most quarters in the past couple of years.
If that reading reflects the genuine state of the economy, it’s going back to a place that nobody wants it to be — the much more stagnant period between the end of 2010 and the middle of 2013.
Recent revisions to GDP figures have showed that there was no double or triple-dip recession over these years, as was feared at the time. But growth was feeble, unemployment was relatively high and the political atmosphere was increasingly negative for the then-governing Coalition.
Chris Williamson, chief economist at Markit, had this to say:
Weakness is spreading from the struggling manufacturing sector, hitting transport and other industrial-related services in particular. There are also signs that consumers have become more cautious and are pulling back on their leisure spending, such as on restaurants and hotels. Wider business service sector confidence has meanwhile also been knocked by global economic worries and financial market jitters.
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