UK private sector growth falls to 11-month low

24th Oct 2024 10:56

(Sharecast News) - Private sector growth in the UK fell to an 11-month low in October ahead of the Budget, according to a survey released on Thursday.

The S&P Global flash purchasing managers' index composite output index declined to 51.7 from 52.6 in September. This was in line with analysts' expectations.

A reading above 50.0 indicates growth, while a reading below signals contraction.

The services PMI business activity index printed at 51.8 in October, down from 52.4 a month earlier and also an 11-month low.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said: "Business activity growth has slumped to its lowest for nearly a year in October as gloomy government rhetoric and uncertainty ahead of the Budget has dampened business confidence and spending. Companies await clarity on government policy, with conflicts in the Middle East and Ukraine, as well as the US elections, adding to the nervousness about the economic outlook.

"The early PMI data are indicative of the economy growing at a meagre 0.1% quarterly rate in October, reflecting a broad-based slowing of business activity, spending and demand across both manufacturing and services.

"Worryingly, the deterioration in business confidence in the outlook has also prompted companies to reduce headcounts for the first time this year."

Williamson said the policies announced in the Budget next week have the potential to play a major role in steering the direction of the economy in the months ahead.

"Encouragingly, however, a further cooling of input cost inflation to the lowest for four years opens the door for the Bank of England to take a more aggressive stance towards lowering interest rates, should the current slowdown become more entrenched," he added.