By Andy Silvester
The UK economy has contracted significantly this month according to a closely-watched index.
S&P Global’s PMI for the UK economy came in at 47.9 – far below the 50 reading which indicates flat growth.
Analysts had predicted a reading of 50.3 this month.
The slowdown in growth will please some in the Bank of England, who are attempting to take the heat out of the UK economy and bring down persistently high inflation.
The Bank is expected to announce at least one more interest rate hike at its next meeting in September, bringing the rate to 5.5 per cent.
Those rate increases have placed a wet blanket over the economy with the cost of credit increasing.
The impact has so far been mostly seen in the housing market, where property prices have slipped significantly. August marked the worst summer month for five years, according to the latest data.
Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said: “The early PMI survey for August suggests that inflation should moderate further in the months ahead, but also indicates that the fight against inflation is carrying a heavy cost in terms of heightened recession risks.
“A renewed contraction of the economy already looks inevitable, as an increasingly severe manufacturing
downturn is accompanied by a further faltering of the service sector’s spring revival. The survey is indicative of GDP declining by 0.2% over the third quarter so far.
This is a developing story and will be updated
