Headline: UK Flash PMI Points to Stagnation as Price Pressures Hit Five-Year Low
The latest flash PMI data signal a loss of momentum across the UK private sector in November, with manufacturing finally nudging back into expansion even as overall activity cools. Softer output price inflation—now at its lowest level in nearly five years—highlights easing cost pressures but also underscores weakening demand and competitive discounting.
The flash Composite PMI slipped to 50.5, below expectations of 51.8 and down from 52.2 previously, indicating a near-stagnant pace of growth. Manufacturing surprised on the upside at 50.2 versus 49.2 expected, improving from 49.7 and moving back into expansion territory for the first time in months. Services activity softened from October’s 52.3, tempering the broader outlook and pulling the composite gauge lower. The survey suggests GDP was flat in November, with fourth-quarter growth tracking at a modest 0.1%.
Pricing dynamics shifted notably. Output price inflation fell to a 59-month low as firms cut selling prices to defend volumes amid weaker demand and rising competition. Goods prices posted their sharpest decline since 2016, while service providers reported diminished pricing power. While favorable for the inflation outlook, this pricing reset is pressuring margins and is associated with faster job shedding and softer investment intentions. With business confidence deteriorating and some spending decisions paused ahead of the Autumn Budget, the policy conversation is likely to tilt away from inflation management toward supporting growth, increasing the odds of interest-rate reductions as early as December.
Key Points – Flash Composite PMI: 50.5 vs 51.8 expected (prior 52.2), signaling near-stagnant growth – Manufacturing PMI: 50.2 vs 49.2 expected (prior 49.7), returning to expansion – Services cooled from a prior reading of 52.3, weighing on the composite index – Output price inflation fell to a 59-month low; goods prices dropped at the fastest pace since 2016 – Survey points to flat GDP in November and about 0.1% growth so far in Q4 – Weaker demand, lower pricing power, and softer confidence raise the likelihood of rate cuts being considered soon
