Sep 23, 2022 05:15AM ET
By:AnalysisWatch
The downturn in UK businesses has deepened this month as they have struggled with rising costs and weakening demand, according to a survey released Friday, highlighting the growing risk of recession.
The S&P Global/CIPS composite purchasing managers' index, released just as Finance Minister Kwasi Kwarteng was due to present the economic agenda of new Prime Minister Liz Truss, fell to 48.4 from 49.6 in August.
It was the lowest reading since the COVID-19 closed in January last year. A Reuters poll of economists pointed to a reading of 49.0. Any reading below 50 marks a contraction in activity.
The PMI is likely to raise fresh questions about the health of the British economy after consumer confidence fell this month to the lowest level since records began in 1974, according to a survey released on Friday.
"The U.K.'s economic problems worsened in September, with falling business activity indicating that the economy is likely in recession," said Chris Williamson, chief business economist at S&P Global .
He said forward-looking indicators from the survey suggest the worst is yet to come in the final months of 2022.
Kwarteng will give more details on the government's fiscal plans, which could amount to more than 150 billion pounds of stimulus, something that could put a floor on flagging business confidence.
The PMI gauge of future output fell to its lowest level since May 2020, when Britain was in the grips of its first COVID-19 shutdown.
The services PMI fell to 49.2 in September from 50.9 in August, the weakest reading since January 2021.
While the manufacturing PMI rose to 48.5 from 47.3, much of the improvement reflected worsening supply chain performance, which in normal times reflects shortages due to strong demand, but not this time.
Despite sterling falling to 37-year lows against the dollar, export orders contracted in both the manufacturing and services sectors, S&P Global said.