Commentary Directory

More UK Data Pointing to Q3 Decline

Jacob Hess
August 24, 2023

Since writing about my initial thoughts on UK weakness in Q3 earlier this week, further data has come out that aligns with the view that there will be a contraction this quarter.

  • The Flash S&P Global UK Composite PMI came in much lower in August at 47.9, down from 50.8 in July. This is a 31-month low and features the sharpest decline in new orders since November 2022. The manufacturing sector weakened further to a 39-month low of 42.5 reflecting the weakness seen in the CBI Industrial Trends survey.
  • Speaking of CBI surveys, the Distributive Trades survey for August saw the lowest Retail Sales index since March 2021 at -44%. Orders placed with suppliers remained sharply low at -37% which meant wholesale volumes continued to fall at -23% (down from -9% in July).

Once again there is more data to come, but it is looking increasingly likely that the UK will contraction by a low single digit rate in the third quarter. This will push the Bank of England towards a pause if it can find better inflation data.