UK Economy Slows Down Amid Intensifying Inflationary Pressures

The UK economy is experiencing a slowdown, according to S&P Global's flash Purchasing Managers' Index data released on September 23. The composite output index dropped to 51.7 in September from 52.5 in August, missing the 52.0 consensus forecast and hitting a three-month low.

The services sector drove the deceleration, with its PMI falling to 51.7, down from 52.5 the prior month and below analysts' expectations of 52.0. Manufacturing, on the other hand, told a slightly different story, as its PMI actually ticked up to 52.0 from 51.7, beating the 51.5 consensus.

However, even within manufacturing, the picture wasn't uniformly positive. The output index slipped to 51.4, its lowest reading in six months. S&P Global's own GDP estimate based on the PMI readings points to quarterly growth of just 0.1% for the current period, a sharp deceleration from the 0.4% expansion recorded in Q2.

Chris Williamson, chief business economist at S&P Global, noted that the data implies a 'worrying combination' of sluggish economic growth and intensifying inflationary pressures. He added that companies are uncertain about both demand and costs, leading to weaker activity.