UK to end 2023 on more positive note: S&P Global

However, the fear is that the tentative nature of growth in December, and in particular the impetus the economy has received from looser financial conditions, means that fears of further policy tightening could tip the economy back into decline, wrote Chris Williamson, chief business economist at the company.

The headline economic growth indicator from the flash PMI surveys rose from 50.7 in November to a six-month high of 51.7 in December. The rise signals increased output for a second month running after three months of decline, he wrote on the company’s website.

While employment meanwhile fell for a fourth month in December, the decline was only marginal and not indicative of any material rise in unemployment. But the labour market has weakened in recent months, in terms of the overall hiring trend, to the softest since the pandemic lockdowns of early 2021.

Manufacturing output contracted sharply in December, down for the seventeenth time in the past 18 months; the rate of decline having picked up speed again.

UK factories are undergoing one of their toughest spells since the global financial crisis in terms of the depth and length of the current downturn, resulting in further steep job losses in the factory sector, Williamson wrote.

This sectoral divergence was also reflected in inflation pressures. Falling prices were again evident in the goods producing sector.

The resulting signal is one of inflation slowing from the 4.6 per cent rate seen in October, but remaining stubbornly above 3 per cent in the coming months, he added.

Fibre2Fashion News Desk (DS)