UK Private Sector Logs Marginal Growth In August

(RTTNews) - The UK private sector logged only a marginal growth in August largely due to relatively muted customer demand and shortages of labor and inputs, flash survey results from S&P Global and Chartered Institute of Procurement & Supply showed Tuesday.

The flash composite output index fell to 50.9 in August from 52.1 in the previous month. The reading was also below economists' forecast of 51.1. A score above 50.0 indicates expansion. The latest pace of growth was the slowest seen over the past eighteen consecutive months.

The overall slowdown was driven by a faster decline in manufacturing output as services activity growth eased only slightly. The manufacturing Purchasing Managers' Index declined sharply to a 27-month low of 46.0 from 52.1 in July. The score was seen at 51.0.

At 52.5, the services PMI hit an 18-month low and was down from 52.6 in July. Nonetheless, the reading was above the expected score of 52.0.

New business received by private sector firms rose only slightly in August, with the rate of growth the slowest seen for 18 months as economic uncertainty and high costs weighed on market confidence and sales.

Although employment increased in August, the rate of job creation was the softest seen since March 2021.

On the price front, the survey showed that input cost inflation was the slowest seen for nearly a year, and the rate of average prices charged hit a seven-month low.

Optimism around the twelve 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.

The tightening of financial conditions via interest rate hikes, the cost of living crisis, labour shortages and strained supply chains are all likely to dampen economic performance further and keep costs elevated in the months ahead, said Annabel Fiddes, economics associate director at S&P Global Market Intelligence.