Sustained robust output in Nov in UK, firms' costs rise at record rate

The data mean the fourth quarter should see a welcome pick up in gross domestic product (GDP) growth after the slowdown to 1.3 per cent seen in the third.

At 57.8, the average reading for the fourth quarter so far is already running higher than the mean of 56.3 registered in the three months to September, and an acceleration of new business inflows recorded by the November flash surveys adds to signs that output growth should remain buoyant in December, thereby cementing the strong end to the year, HIS Markit said in a press release.

The news was by no means all positive, notably with growth once again heavily skewed towards the service sector. Solid service sector growth that far exceeded the pre-pandemic long-run average contrasted with only modest production growth in the manufacturing sector. The rate at which production expanded was the third lowest since February, albeit up slightly on October's low.

The service sector continued to benefit from the opening up of the economy, with no new COVID-19 restrictions applied and recent weeks having seen a loosening of international travel restrictions, which helped drive the strongest growth in service sector exports for over three years. However, concerns over high COVID-19 case numbers were cited as a dampener on activity in some firms.

Factories in contrast continued to struggle with supply shortages and falling exports, the latter now having fallen for three successive months. Supply shortages remained widespread, with suppliers' delivery times lengthening at a rate once again far exceeding anything recorded prior to the pandemic, albeit with the incidence of delays easing in November to the lowest since July.

The ongoing sellers' market created by the supply constraints alongside solid demand for materials led to another unprecedented rise in price pressures, with costs in both manufacturing and services rising at the steepest rates since comparable data were first available in January 1998.

Survey respondents often cited higher shipping costs and rising fuel, transport and energy bills alongside steep price increases for items in short supply, as well as rising staff costs and wage growth, IHS Markit added.

Fibre2Fashion News Desk (DS)