U.K. economy likely to shrink again in December; composite PMI edges up to 49.0

By Geoffrey Smith 

Investing.com -- The U.K. economy appears likely to shrink again in December, as a stabilization in services fails to completely offset a slump in manufacturing. 

The composite purchasing managers index published by S&P Global rose slightly to 49.0 from 48.2 in November, but remained below the 50 level that typically separates growth from contraction for a fifth straight month. The services PMI, which covers a larger part of economic activity, recovered to 50.0 from 48.8 in November, but the manufacturing PMI slumped to 44.7 - its lowest since June 2020 - from 46.5.

S&P noted a "solid and accelerated" drop in manufacturing employment as new export orders fell for the sixth month in a row. Employment in services stagnated.

S&P is reporting its December PMIs a week earlier than usual, ahead of the Christmas holiday.

“The December data add to the likelihood that the U.K. is in recession, with the PMI indicating a 0.3% GDP contraction in the fourth quarter after the 0.2% decline seen in the three months to September," said Chris Williamson, Chief Business Economist at S&P Global (NYSE:SPGI) Market Intelligence. 

“For now, the downturn looks to be relatively mild," Williamson said, although he warned that forward-looking elements of the survey such as business confidence and order books remain low by historical standards, " both of these key gauges signalling heightened degrees of economic stress."

(CORRECTION: The original version of this article misstated the reporting month)