Daily Management Review

Strong PMI Numbers For British Manufacturing And Construction Offset Slight Fall In Services Sector For November


12/07/2017




Strong PMI Numbers For British Manufacturing And Construction Offset Slight Fall In Services Sector For November
There is potential of the inching up of the British economic growth in the present quarter as is evident from the data showing strong manufacturing sector and construction sector growth despite a slight slowdown in the services sector, showed a survey of all the three sectors.
 
The large services sector purchasing managers' index (PMI) survey was above the 50.0 growth line for November even though it fell slightly to 53.8 from 55.6 in October.
 
The services sector accounts for 77 percent of the British economy and November marked the 16th consecutive month that the sector has registered growth in the survey.
 
The strong performance of the PMI surveys for the manufacturing and construction sectors more than made up for the services sector in the composite index.
 
"We did see the services survey weaken in November and we saw cost pressures intensify," Ruth Gregory, UK economist with Capital Economics a London-based financial data firm, said.
 
She added: "But the sharp rise in the construction and manufacturing surveys meant that the economy-wide PMI which combines all three fell just a little, meaning that GDP growth at 0.4 percent or 0.5 percent per quarter -- this is a touch above the rate for the third quarter."
 
The Office for Budget Responsibility (OBR) had reduced its expectation of growth for the next year last month from to about 1.4 percent from the 1.8 percent growth rate it had predicted in March.
 
But the most recent figures indicated a potentially better outcome according to Gregory. "We still think the economy should hold onto its momentum into the fourth quarter, and produce growth of around 2 percent next year," Gregory said.
 
For the services sector, headwinds of stretched budgets and Brexit- related uncertainty had brought down the numbers according to some service sector companies even as others noted rise in business and consumer spending during November.
 
While the average rate of growth of the sector was noted slightly below the overall average for the year, a good increase in this sector was signaled by the latest reading.
 
Respondents from the service sector hoped that the higher levels of business activity could lead to a strong upturn in the sector in the new year, said survey report.
 
The survey also noted a rise in the backlogs of work in the services sector for the third month in the last four months and as such clear signs of pressure on operating capacity of the service sector firms was evident in the survey. A lack of suitably skilled staff and recruitment difficulties ere noted as the primary factors responsible for rising volumes of unfinished work in the services sector.
 
The unemployment rate however is a cause of relief for the British economy and at 4.3 percent, it is at its lowest in the last 40 years and is lower compared to other advanced economies.
 
Gregory said: "The survey suggests that services firms remain confident enough to take on new recruits at a solid pace. The balance is a still a little above its long-run average."
 
(Source:news.xinhuanet.com) 






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