Renewed lockdown sends UK economy tumbling again - PMI

People sit and relax after receiving their Pfizer vaccination at Salisbury Cathedral on Wednesday

(Alliance News) -Â Business activity in the United Kingdom slumped in January amid a third national lockdown, figures from IHS Markit and the Chartered Institute of Procurement & Supply showed on Friday.

"Demand conditions weakened further, as new business inflows contracted for the twelfth successive month". The IHS Markit flash German services purchasing managers' index fell to 46.8, down from 47 at the end of past year.

The headline index slipped back under the 50.0 threshold that separates contraction from expansion after stabilising for the first time in 20 months in the previous month.

The composite purchasing managers' index tumbled to an eight-month low of 40.6 in January from 50.4 in December. Economists polled by Reuters had expected a fall to 48.5.

Business activity in the U.S. jumped at the start of 2021 amid hopes that Covid-19 vaccines would put an end to the pandemic and in anticipation of the new administration's policies, the results of two surveys showed.

Both the services and manufacturing readings severely undershot forecasts.


Ruth Gregory, senior United Kingdom economist at Capital Economics, said the drop in the composite flash PMI was "far larger than the consensus forecast".

The continued contraction in German services was partly offset by resilience in manufacturing, which benefited from rising exports, particularly to China.

Activity in the manufacturing sector slowed to four-month low of 57.0 from 58.3 in December, remaining however in expansion territory as exports kept factories humming, the survey showed.

But the data also showed services-sector activity taking a big hit from the latest anti-virus emergency measures, with incoming new business at their weakest since May, the month when the country's prior state of emergency ended.

"Manufacturers are brimming with confidence about the outlook, with output expectations in the sector now at a record high".

A double-dip recession in Europe seems an "increasingly inevitable" prospect, a PMI survey conducted by Markit Economics revealed on Friday. However, its economy only stagnated in the final quarter of a year ago according to a preliminary estimate by the Federal Statistical Office, which said last week that gross domestic product shrank 5 per cent over the course of 2020.

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