UK economy in worst state since 2009 as Brexit uncertainty affects new orders
Manufacturing and construction industry worst hit since 2012 and 2009 respectively according to official Purchasing Managers Index
The UK economy had a weak start to the fourth quarter of 2019, with services companies suffering their seventh monthly decline in new orders this year.
The UK Purchasing Managers Index (PMI) survey recorded a third successive monthly contraction of business activity in October, leading to the economy being worst state since early-2009.
The all-sector PMI, which covers manufacturing and construction as well as services, rose from 48.8 in September to 49.5 in October but still remained below 50 for a third month in a row, the first time since 2009, during the global financial crisis. Economists blame Brexit uncertainty for the continued weakness.
Output fell sharply in the construction sector, with a more modest decline seen in manufacturing.Manufacturing is now in its worst state since 2012 while construction is in its deepest downturn since 2009. Both appear to be in recession..
Meanwhile, activity in the service sector stagnated, an improvement on the decline seen in September. However, sector activity is still at its lowest since 2012.
The lack of new order inflows and economic uncertainty also led to firms reducing staff intake.
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In October, employment fell overall, with the rate of job losses easing only slightly in September. Net job losses were recorded in all three sectors for the second month running.
Brexit has now been delayed till January 31 from the original date of October 31 with a general election to be held on December 12.
Construction expert Gareth Belsham, director of the national property consultancy and surveyors Naismiths, said that the figures showed that the economy was fragile, but added that receding chances of a no deal Brexit were a “silver lining”.
“While few would bet on a magical return to business as usual after the December election, even a modicum of stability could lead to the thawing of long-delayed projects,” he said.