- Prior 50.9
- Manufacturing PMI 46.4 vs 47.5 expected
- Prior 47.2
- Composite PMI 51.7 vs 50.9 expected
- Prior 50.7
This is a contrast to the euro area data from earlier, as the UK economy is seen picking up further towards the end of the year. Overall activity is bolstered by the services sector once again as manufacturing activity remains in contraction territory for now. On the inflation front, input prices were seen rising to their highest since August while output charges are also seen increasing with little sign of a slowdown since the summer. S&P Global notes that:
“The UK economy continues to dodge recession, with
growth picking up some momentum at the end of the year
to suggest that GDP stagnated over the fourth quarter as
a whole. While employment meanwhile fell for a fourth
month, the decline was only marginal and not indicative of
any material rise in unemployment.
“This is, however, a dual-speed economy, with
manufacturing contracting sharply while services regained
some poise, the latter growing faster in December thanks
in part to financial services activity being buoyed by hopes
of lower interest rates in 2024.
“This divergence is also reflected in inflation pressures,
with falling prices again evident in the goods producing
sector while service providers report persistent elevated
inflationary pressures, often linked to wage growth. The
resulting signal is one of inflation remaining stubbornly
above 3% in the coming months.
“The service sector’s resilience and sticky inflation picture
will add to speculation that it’s too early for the Bank of
England to be talking about cutting interest rates, and will
add fuel to some policymakers’ calls for further rate hikes.
However, the fear is that the tentative nature of growth in
December, and the impetus from looser financial
conditions, means that fears of further policy tightening
could tip the economy back into decline.”