The double-dip recession in the UK economy, despite being much less profound than last spring, is reflected in the preliminary January activity measures shown on Friday, which have fallen far short of expectations as a result of further restrictions aimed at curbing the coronavirus epidemic.
Seasonally adjusted composite PMI for UK manufacturing and services according to a joint survey by IHS Markit and the Chartered Institute of Purchasing and Supply (CIPS)
It fell to 40.6 in January, an eight-month low of 50.4 last month.
The average preliminary analyst consensus would likely be the BMI for January of 45.5. BMI indicators below 50 indicate a decrease in activity in the studied sectors. IHS Markit constitutes the initial rapid survey at the end of each month of 85 percent of the dataset used for the full BMI index.
In its analysis of preliminary data for Friday for the Friday presentation, the House of Representatives highlights:
Despite the sharp decline in the UK’s general monthly BMI measure, UK private sector companies remain optimistic about the long-term outlook. The report shows that the sub-index of expectations for the next twelve months rose slightly from last month’s level and is now at its highest level since May 2014.
IHS Markit confirms that it participated in the survey
The vast majority of companies are confident in the success of the Coronavirus vaccination campaign and are based on their optimistic expectations.
In its analysis of the January survey, the House of Representatives also indicates that the current numbers indicate a much smaller decline in private sector activity compared to last spring, at the time of the first national lockdown introduced at the time of the coronavirus outbreak in the UK at the time.
Last April, the first full month after national restrictions imposed at the end of March were implemented, the BMI of the manufacturing and service sectors fell to 13.8. This was by far the lowest level since the systematic compilation of this compound measure of activity began in January 1998, indicating that activity in the UK economy as a whole had fallen into a free fall during that period.
On the April Composite Scale, the BMI for the UK service sector was 13.4,
This attests to the complete collapse of activity in the sector. This was also reflected in the performance of the British economy as a whole at that time: between February and April of last year, GDP fell by 25.8 per cent at an unprecedented rate, and in April GDP fell by an unprecedented 18.8 per cent from the previous year. Month.
Commenting on the January BMI data released on Friday, Chris Williamson, chief commercial economist at IHS Markit, said that January’s indications of a sharp drop in business activity indicate that UK GDP will fall sharply in the first quarter of this year. Which means the UK economy is heading towards a double-dip recession.
Williamson also stresses, however, that the current downturn appears to be as far from as severe as it was last spring.
Macroeconomic analysts in London share the optimism of the UK corporate sector as revealed by the BMI data on Friday.