- Prior 52.5
- Manufacturing PMI 52.0 vs 51.5 expected
- Prior 51.7
- Composite PMI 51.7 vs 52.0 expected
- Prior 52.5
Comment:
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said:
“September is seeing a worrying combination of disappointingly sluggish economic growth and intensifying inflationary pressures, with subdued business confidence and high costs meanwhile continuing to discourage hiring.
“Output growth across the manufacturing and services PMI surveys has slowed to a pace consistent with the economy growing at a mere 0.1% quarterly rate. Growth, business confidence and employment are all being hamstrung by high energy prices, elevated business costs, geopolitical worries, higher market borrowing costs and uncertainty over government policy at home in the run up to the autumn Budget.
“While the upturn in the survey’s price gauges suggest the Bank of England looks likely to keep a hawkish bias, the worryingly lacklustre pace of business growth underscores the risk to the economy from higher borrowing costs.”
The reaction to the data has been pretty muted as it didn’t change anything for the Bank of England. As a reminder, the central bank has been flagging growth risks due to softer labour market, while acknowledging inflation risks stemming for the Iran war and elevated energy prices.
At the last policy decision, the BoE warned that the prolonged conflict might require rate hikes to lean against inflationary pressures. The meeting was taken as dovish, though, because the committee also paused its sales of government bonds for six months.
Looking ahead, the market will continue to focus on the Middle East as oil prices have been the main driver of inflation and rate hike expectations. Positive US-Iran talks and some kind of breakthrough could support the British Pound and UK equity markets on better risk sentiment. Another breakdown in negotiations and a re-escalation, on the other hand, should weigh further on UK markets.
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