Surveys show downturn in UK economy

Europe Materials 3 October 2022 21:47 (UTC +04:00)
Surveys show downturn in UK economy

Recent surveys have shown the United Kingdom (UK) economy continued to lose momentum in September, saddled by persistently high inflation, rising interest rates and a sharply slowing growth of manufacturing and house prices, Trend reports citing Xinhua.

September saw the downturn in UK manufacturing output extend to three months, as companies cut back production in response to declining new order intakes, a survey published by S&P Global showed on Monday.

The S&P Global / CIPS UK Manufacturing Purchasing Managers' Index posted 48.4 in September, up from 47.3 in August but below the flash estimate of 48.5.

Contractions were registered across the consumer, intermediate and investment goods industries. The decline was the steepest at intermediate goods producers, which was also the only sub-sector to see its rate of contraction accelerate, the survey said.

Manufacturers linked lower production to a reduction in new work intakes. The level of new business declined for the fourth month running, albeit to a slightly weaker extent than in August. Companies faced tougher conditions in both domestic and export markets.

"With existing headwinds from the cost-of-living crisis likely to be exacerbated by the current volatility in financial markets, growing economic uncertainty and further increases in borrowing rates, the industrial sector is likely to remain in the doldrums during the coming quarter to add to deepening recession risks," Rob Dobson, director at S&P Global Market Intelligence, said.

Other surveys corroborated these bleak findings.

"In September, annual house price growth slowed to single digits for the first time since October last year, although, at 9.5 percent, the pace of increase remained robust," Robert Gardner, chief economist at mortgage lender Nationwide, commented in a press release.

"Prices were unchanged over the month from August ... and this is the first month not to record a sequential rise since July 2021," he said.

"Headwinds are growing stronger, suggesting the market will slow further in the months ahead. High inflation is exerting significant pressure on household budgets with consumer confidence declining to all-time lows."

Also on Friday, the Recruitment and Employment Confederation (REC) said that the number of job adverts posted in the UK dropped to 143,000 in the week of Sept. 19-25, the lowest level since the COVID-19 pandemic.

"Employer demand is still significant, but a cooling-off is no surprise. With inflation high, and employers concerned about the economic picture, some moderation in hiring from the sugar rush of the past year was predictable," REC Chief Executive Neil Carberry commented.