UK business output falls in December, PMI survey shows
UK business output fell for the second month running in December as manufacturing production suffered its heaviest fall since the financial crisis and the dominant services sector dipped.
The preliminary IHS Markit/CIPS purchasing managers' index fell to 48.5 from 49.3 - the lowest for more than three years. A score below 50 signals contraction, while a reading above indicates expansion.
New orders fell for the fifth month in a row and firms cut jobs as they reduced capacity in line with weaker demand. Manufacturing output fell at its fastest since early 2009 when the UK was in recession after the near-meltdown of the financial sector.
The service sector, which makes up about three-quarters of the UK economy, registered a slight drop in activity in December - the first time services had declined two months in a row since 2009.
Respondents blamed political uncertainty, worries over Brexit and the weak global economy for the gloomy picture. The survey follows official figures that showed the UK economy stagnated in October. IHS Markit said its results suggested the economy may have shrunk in the final quarter of 2019.
Chris Williamson, IHS Markit's chief business economist, said: "December’s PMI survey data sadly lacked festive cheer, indicating that the economy contracted for the third time in the past four months. The latest decline was the second-largest recorded over the past decade, and increases the likelihood that the economy contracted slightly in the fourth quarter as Brexit-related uncertainty intensified in the lead up to the general election."
Data collection for the survey ended on 12 December, the day of the general election, which the Conservatives won with a big majority. The survey showed sentiment improving slightly in the hope that the election would bring more clarity to the business outlook after years of parliamentary deadlock over Brexit.