British Manufacturing-Services PMI Falls to Two-Year Low in January

S&P Global reported that the preliminary Purchasing Managers’ Index (PMI) for UK manufacturing and services fell to 47.8 in January, its lowest level in 2 years, from 49.0 in December. The PMI remaining below 50, indicating that the UK business sector is still in contraction, raising concerns of a potential recession this year.

The fall in PMI is attributed to skyrocketing interest rates and weak demand, resulting in a slowdown in new orders and employment. Despite this, business sentiment for the year ahead hit an eight-month high, as hopes of an economic recovery and slowing inflation persist.

The preliminary manufacturing PMI rose to 46.7 in January, its highest level in four months, from December’s 45.3. Similarly, the preliminary services PMI dropped to 48.0 in January, its lowest level in two years, from 49.9 in December, also indicating contraction in the UK services sector.

The poor performance of the PMI in January is a cause for concern for the UK economy, as both manufacturing and services sectors are significant contributors to the country’s GDP.

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