U.K Private Sector Output hits Steepest Fall Since May, Enters Contraction Zone

Flash Composite Output Index in the U.K fell sharply to 40.6 in January, down from 50.4 in December, according to the IHS Markit press release. The slowdowns reflected national lockdown restrictions due to the coronavirus pandemic.  

• Flash Services Business Activity was 38.8 in January, down from December’s 49.4, an 8-month low due to reduced consumer spending and an economy hit by trade restrictions.
• Flash Manufacturing Output Index was 50.3, down from December’s 55.9, an 8-month low, 
• Flash Manufacturing PMI was 52.9, down from 57.5 in December, a 7-month low.
• Manufacturers recorded a fractional rise in production volumes, but the expansion eased, reflecting weaker export orders and short-term supply chain difficulties.
• The speed of the downturn in U.K private sector output was softer than at the start of the pandemic, with many businesses citing efforts to tackle new COVID-19 restrictions.
• Volumes of new work decreased for the fourth consecutive month in January, while strong cost pressures persisted at the start of 2021. 
• U.K’s private sector remains upbeat about longer-term prospects as the expectations index for the next 12 months picked up slightly from December and was the highest since May 2014.

U.K stocks and the pound are currently declining. FTSE 100 is down 0.76%, GBPUSD is down 0.46%.