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New flash estimates released on Monday showed the UK private sector output has fallen for the third straight month, fuelling speculation the UK is headed for a "deep" recession.
John Glen, CIPS chief economist, said: "No great surprise seeing the manufacturing and services sectors backsliding again in October given the jangled nerves amongst cash-strapped businesses facing a faltering economy, political turmoil and historically high input costs."
The S&P Global/CIPS flash UK purchasing managers' index composite output measure fell to a 21-month low of 47.2 points in October from 49.1 in September.
Any reading below 50 points indicates contraction.
"Adding to signs of weakening underlying demand, new orders decreased at the sharpest pace since January 2021. This was often attributed to a considerable downturn in business and consumer confidence in recent months," S&P Global explained.
The flash services PMI business activity index slumped to 47.5 points in October from 50.0 in September, while the manufacturing PMI slid to 45.8 from 48.4.
S&P Global added: "UK private sector firms also indicated a steep fall in business expectations for the year ahead, with optimism the lowest since April 2020. Intense inflationary pressures, escalating political uncertainty and rising interest rates were the most commonly cited reasons for downbeat sentiment in October."
Chris Williamson, chief business economist at S&P Global Market Intelligence, said the recent political and financial market "upheavals" were playing their part in the output slump.
"The heightened political and economic uncertainty has caused business activity to fall at a rate not seen since the global financial crisis in 2009 if pandemic lockdown months are excluded," he continued. "GDP therefore looks certain to fall in the fourth quarter after a likely third quarter contraction, meaning the UK is in recession."
Williamson said the survey also showed continued heightened price pressure, which will force the Bank of England into further aggressive interest rate hikes.
"On top of the collapse in political stability, financial market stress and slump in confidence, these higher borrowing costs will add to speculation of a worryingly deep UK recession," he added.
The S&P Global/CIPS flash UK composite PMI is compiled by S&P Global from responses to questionnaires sent to survey panels of around 650 manufacturers and 650 service providers. The data was collected from October 12 to 20.
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