UK economic recovery steadies in Sept, price pressures mount -PMI By Reuters
LONDON (Reuters – Britain’s economy recovered from the post-lockdown crisis without losing momentum. However, prices rose at the fastest rate ever recorded, adding to rising inflation signs, according to a poll released Tuesday.
Final readings of IHS Markit/CIPS composite purchasing managers’ index (PMI) edged up at 54.9 in August from 54.8 in Aug. This is the first time that it has not fallen since May.
It was also significantly higher than what had been expected for September at 54.1
The figure was a strong indicator of overall company growth. However, it did not reflect the fastest growth of new orders in the period since early 2021, when coronavirus lockdowns were lifted.
According to certain companies, the planned end of the home-buyer tax relief on Sept. 30, which was supposed to be ended, contributed towards the slowdown in orders.
The backlog of work increased as companies struggled to fill vacancies. There was also a slower pace of job creation, which had reached a record in August. This was due to redundancies in advance of the government’s furlough scheme ending at the end.
Since 1999, when the composite index was created in 1999, companies have increased their prices at a rapid pace. For services companies, input costs rose quickly while they were growing more slowly in manufacturers.
The Bank of England monitors closely any sign that inflation’s recent increase might be more long-lasting than predicted. The BoE stated last month that the case for raising interest rates had been strengthened by rising inflation.
IHS Markit claimed that data didn’t fully capture the inflationary effect of Britain’s fuel crisis, and the surging prices of energy at the end the month.
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