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- The PMI figure for December preliminary reading rose to 51.7
- This was the highest figure in the last six months
- Up from November’s final reading of 50.7
British business growth has struck a six-month high, lifting hopes the economy has just enough momentum to avoid a recession for now.
The S&P Global/CIPS UK Composite Purchasing Managers’ Index (PMI) – which covers the manufacturing and services sector – rose to 51.7 for December.
The PMI figure, which is based on an index where the 50-mark separates growth from contraction, was up from 50.7 in November.
UK firms have been in growth since recording a PMI of 48.7 for October.
The S&P Global/CIPS UK Composite Purchasing Managers’ Index (PMI) – which covers the manufacturing and services sector – rose to 51.7, according to December’s preliminary reading, the highest in six months
On Thursday, The Bank of England (BoE) kept borrowing costs at a 15-year high and once again stressed they would need to remain elevated to smother the risks from still-high inflation. But financial markets are pricing rate cuts next year.
The BoE opted to hold the base rate at 5.25 per cent, a move which will reinforce the view that interest rates have peaked.
The PMI showed that in the services sector, business activity climbed to 52.7 from 50.9, also its highest reading since June and only the second time since July that the index was above the 50.0 growth threshold.
But manufacturing’s reading fell to 46.4, reversing some of November’s improvement and representing the 17th consecutive month of contraction.
Solid growth in new business for services companies offset a fall in manufacturing orders to give the first overall order growth in six months. Staffing levels fell for a fourth month in a row.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said: ‘The UK economy continues to dodge recession with growth picking up some momentum at the end of the year to suggest that GDP stagnated over the fourth quarter,’
‘This is, however, a dual-speed economy, with manufacturing contracting sharply while services regained some poise.’
Williamson added that financial services activity was helped by hopes of lower interest rates in 2024.
On Wednesday, data from the Office for National Statistics on Wednesday revealed Britain’s economy contracted by 0.3 per cent in October.
This was a steeper decline than expected, with analysts having forecast a fall of 0.1 per cent.
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