UK industry suffers setback in September as recovery slows

UK industry suffers setback in September as recovery slows





UK private sector output suffered a setback in September as growth slowed, according to new data.

The IHS Markit/CIPS Flash UK composite purchasing managers’ index (PMI), a closely watched measure, hit 55.7 in September, falling from a reading of 59.1 in August.

Everything above 50 is considered growth.

It was below analysts’ forecasts, with a consensus of economists expecting a reading of 56.1 for the month.

The last figures “pointed to a setback for the recovery in UK private sector output”, as the rate of expansion eased from August’s six-year high, the report said.

The latest reading comes ahead of further tightening of coronavirus restrictions, and is the lowest figure since June.

Chris Williamson, chief business economist at IHS Markit, said: “The UK economy lost some of its bounce in September, as the initial rebound from Covid-19 lockdowns showed signs of fading.

“It was not surprising to see that the slowdown was especially acute in services, where the restaurant sector in particular saw demand fall sharply as the Eat Out to Help Out scheme was withdrawn.

“Demand for other consumer-facing services also stalled as companies struggled amid new measures introduced to fight rising infection.”

Surveyed companies said they saw some recovery in business activity as they successfully adapted to guidelines, reporting a general boost from the reopening of some areas of the economy.

However, there were also widespread reports that a lack of consumer confidence and persistent disruptions to business operations held back the recovery in September.

Initial data showed a slowdown in manufacturing output growth, to 54.3 for the month from 55.2 in August, although exports improved on rising demand from Asia.

The service sector also reported slower growth as confidence remained weak in the face of the pandemic.

Duncan Brock, group director at CIPS, said: “The effects of Covid restrictions continued to suffocate the UK economy this month as some of the recent gains in the manufacturing and services sectors were lost, and supply chains continued to suffer bouts of instability with stock shortages and longer delivery times.

“With the weakest overall optimism since May when the recovery started, the fragility of the economic recovery has been revealed.”

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