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The UK's private sector continued to contract in October, survey results showed on Thursday, but at a slower pace than expected.
The latest S&P Global/CIPS UK composite purchasing managers' index fell to 48.2 points in October from 49.1 in September. Falling further beneath the 50-point no-change mark, it shows the decline in business activity has worsened.
However, the reading was markedly better than the flash estimate of 47.2 points.
"Although only modest, the latest reading signalled the fastest rate of decline since January 2021. Manufacturing production fell at a much faster pace than service sector activity," S&P Global said.
The uncertainty caused by price inflation sent business confidence sharply down from September, with private sector growth projections at their weakest since April of 2020.
"Slower rates of input price inflation were seen in both the manufacturing and service sectors in October, despite severe pressure on business expenses from higher energy bills and staff wages," S&P noted.
The S&P Global/CIPS UK services PMI fell to into contraction territory for the first time in 20 months, with a reading of 48.8 points in October, compared to 50.0 in September. However, this was also better than the estimate of 47.5 previously.
This was due to "household spending cutbacks and shrinking business investment combined to dent new order volumes", according to Tim Moore, economics director at S&P Global Market Intelligence.
"A number of firms noted that political uncertainty and rising borrowing costs since the mini-Budget had led to greater risk aversion among clients and a wait-and-see approach to new projects. There were also many reports that higher energy bills had led to reduced spending on non-essential services," Moore explained.
According to results released on Tuesday, the UK manufacturing PMI slipped to 46.2 in October from 48.4 in September. The reading was a 29-month low, but came in above the previous flash estimate of 45.8.
The composite PMI is a weighted average of the UK's manufacturing and services PMIs, compiled from responses to surveys sent to 650 services companies and 650 manufacturers, with data collected between October 12 and 27.
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