LONDON (Reuters) – British businesses recorded another decline in activity this month and cost pressures eased further, a survey showed on Tuesday, highlighting the risk of recession as the Bank of England prepares for its interest rate decision next week.
The preliminary reading of the UK Standard & Poor's Global Purchasing Managers' Index (PMI) for the services sector in October fell to 49.2 from 49.3 in September, marking the lowest reading since January and tracking below the 50 mark, which separates growth from contraction, for a third month. In one row.
A Reuters poll of economists indicated that the reading was stable.
Services companies reported the smallest increase in input costs since February 2021, although selling prices rose at a slightly faster rate.
Overall, the PMI survey indicated a quarterly decline in economic output of about 0.1%, with optimism among business owners reaching its lowest levels so far this year.
“This supports our view that a moderate recession is occurring and the Bank of England has finished raising interest rates,” said Ruth Gregory, deputy chief UK economist at consultancy Capital Economics.
The UK manufacturing PMI rose to 45.2, compared to 44.3 in September, the highest level in three months, but still indicating a rapid contraction in production.
The composite PMI, which combines services activity and industrial production, rose from 48.5 to 48.6.
(Written by Andy Bruce)
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