The mood of Britain’s private sector fell to its worst performance in 13 months in November, according to a survey released on Wednesday.
Gauging the mood of the services, manufacturing and construction sectors, the S&P Global composite purchasing managers index (PMI) fell from 51.8 to 50.5 between October and November.
This was an improvement on the initial flash reading of 49.9, which, at below 50.0, signalled contraction.
S&P economics director Tim Moore noted concern around growing employment costs in the wake of October’s Budget had largely led the a “gloomier” outlook among businesses.
Economists added that the upward revision of the figure in the final survey, compared to responses taken in the first half of the month, was encouraging.
“[It] suggests firms responding to the survey after November 20 were more positive than those answering earlier,” said economist Rob Wood at Pantheon Macroeconomics.
“The PMI tends to overreact to political events and uncertainty [...] and consistent with that, the further we get from the Budget and US election the less firms’ sentiment is hit.”
Matt Swannell, chief economic advisor to the EY ITEM Club, agreed, saying PMI results can be "heavily affected by swings in business sentiment, and don't always show genuine trends in activity".
With November's survey being the first since the Autumn Budget, his view is that "sentiment is likely to have played an outsized role in driving today's results".
"The survey data can be volatile and has been a relatively questionable leading indicator of GDP growth," he said.