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UK economic recovery steadies in Sept, price pressures mount -PMI

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By Reuters
UK economic recovery steadies in Sept, price pressures mount -PMI
UK economic recovery steadies in Sept, price pressures mount -PMI   -   Copyright  Thomson Reuters 2021

LONDON – Britain’s post-lockdown economic recovery avoided losing further momentum in September but companies increased prices at the fastest pace on record, adding to signs of rising inflation, a survey showed on Tuesday.

The final reading of the IHS Markit/CIPS composite Purchasing Managers’ Index (PMI), which combines Britain’s services and manufacturing sectors, edged up to 54.9 from 54.8 in August, the first time it did not fall since May.

The reading was also higher than the preliminary estimate for September of 54.1.

While the figure represented strong overall growth for companies, shortages of staff, raw materials and transport led to the slowest growth in new orders since shortly before the lifting of coronavirus lockdowns in early 2021.

Some companies said the scheduled end on Sept. 30 of a tax break for home-buyers contributed to the slowdown in new orders.

Backlogs of work grew as firms struggled to fill their vacancies and a slowdown in job creation from a record high in August reflected some redundancies ahead of the expiry of the government’s furlough scheme at the end of the month.

Companies raised the prices they charged at the fastest pace since the composite index was launched in 1999. Input costs also rose sharply for services firms but they grew more slowly for manufacturers.

The Bank of England is watching closely for any signs that the recent rise in inflation might prove longer-lasting than it has predicted. Last month the BoE said the case for an interest rate hike had strengthened as inflation pressure mounted.

IHS Markit said the data had yet to fully reflect the inflationary impact of Britain’s fuel crisis and surging energy prices at the end of the month.