UK private activity growth slowed more than expected to an 18-month low as the manufacturing sector shrank on weaker demand, supply and labor shortages , according to a survey published on Tuesday.
The S&P/Cips Global Flash UK Composite Purchasing Managers Index, a measure of private sector activity, fell to 50.9 in August from 52.1 the previous month and the lowest since February 2021.
The reading, based on data collected between August 12 and 19, was lower than the forecast of 51.1 by economists polled by Reuters and was only slightly above the 50 mark that indicates a majority businesses report an expansion from the previous month.
“The UK private sector edged closer to stagnation in August as slight growth in activity in the services sector barely offset a growing slowdown among manufacturers,” said Annabel Fiddes, associate director of the Economics at S&P Global Market Intelligence.
UK manufacturers reported an accelerated drop in production this month, the fastest rate since May 2020. Falling customer demand, delayed delivery of goods and materials and labor shortages work weighed on performance, according to panel members.
Weakening demand in manufacturing and services led to a further drop in stocks, while employment grew at the slowest pace in 17 months.
On a more positive note, inflationary pressures moderated again in August, although they remained strong overall.
“Many concerns keep private sector business owners up at night,” said Cips chief economist John Glen, such as supply chain lockdowns, inflation, interest rates and port disruptions.