Biz activity falls across UK private sector economy in Oct: S&P Global

The latest survey also pointed to modest reductions in new order volumes and staffing numbers at private sector firms.

Concerns about the outlook for business and consumer spending meant that output growth expectations for the year ahead were the lowest since December last year.

At 48.6 in October, the headline seasonally adjusted S&P Global- Chartered Institute of Procurement & Supply (CIPS) flash UK composite output index was up fractionally from 48.5 in September, but below the 50 no-change mark for the third month running.

The latest reading signalled a modest reduction in private sector output, which contrasted with an upward trend on average during the first half this year, S&P Global said in a release.

October data signalled a reduction in manufacturing output for the eighth consecutive month, which represented the longest period of decline since 2008-09. However, the rate of contraction was the least marked since July.

Manufacturers noted that customer destocking and a lack of incoming new work to replace completed contracts had weighed on production schedules.

Modest fall was observed in new work across the private sector economy. Lower new order volumes have been recorded in each of the past four months and the latest decline was slightly faster than seen in September.

Survey respondents typically cited caution among corporate clients, alongside stretched household budgets due to cost-of-living pressures. Weaker export sales also acted as a constraint on overall demand, especially in the manufacturing sector.

Another solid decline in backlogs of work suggested a lack of pressure on business capacity in October. This resulted in reduced staff hiring, with private sector employment decreasing for the second month running.

Lower confidence regarding the year ahead business outlook contributed to hiring freezes and falling workforce levels in October.

The latest survey indicated that business optimism weakened for the first time since July and was the lowest seen in 2023 to date. Similarly sharp falls in growth expectations were seen across the manufacturing sector.

Survey respondents typically cited worries about the UK economic outlook and constraints on spending due to higher borrowing costs.

Input price inflation meanwhile slowed for the third consecutive month in October and was the lowest since the start of 2021.

ALCHEMPro News Desk (DS)