Business activity decreased again across the UK private sector during October with lower output seen in both the manufacturing and service sectors.
At 48.6 in October, the headline seasonally adjusted S&P Global/CIPS Flash UK composite output index was up fractionally from 48.5 in September but below the 50.0 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 of 2023.
Chris Williamson, chief business economist at S&P Global Market Intelligence said: “The UK economy continued to skirt with recession in October, as the increased cost of living, higher interest rates and falling exports were widely blamed on a third month of falling output.”
“The overall pace of decline remains only modest, signalling a mere 0.1% quarterly rate of GDP decline, but gloom about the outlook has intensified in the uncertain economic climate, boding ill for output in the coming months. A recession, albeit only mild at present, cannot be ruled out,” he added.
The flash UK services PMI business activity index fell to 49.2 in October from 49.3 in September, hitting a 9-month low, while the flash UK manufacturing PMI rose to 45.2 from 44.3, a 3-month high.
Service providers reported subdued consumer confidence, the impact of elevated borrowing costs, and weak client demand across the real estate sector.
Ruth Gregory at Capital Economics said despite edging higher the PMI is at a level that, historically, has been consistent with a contraction in real GDP.
"This supports our view that a mild recession is underway and that the Bank of England has finished hiking interest rates," she said.