UK PMI weakness again in December! Prime Minister Sunac makes "five promises" under multiple problems
The UK economy has started 2023 on a bad footing. The latest UK manufacturing PMI released in December reflects one of the worst declines in economic activity since the 2008-09 recession.
The S&P Global UK Manufacturing Purchasing Managers' Index (PMI), released on Tuesday (3) local time, fell to 45.3 in December from 46.5 in November, marking the fifth consecutive monthly decline and a 31-month low.
On Wednesday, British Prime Minister Rishi Sunak delivered his New Year's 2023 speech, making statements and promises on five major issues, including developing the economy.
Weak economic performance
The UK manufacturing sector continues to perform weakly as we end 2022, with several sub-indicators such as production, new orders and employment falling at a faster rate.
Rob Dobson, director at Standard & Poor's, said, "Industrial output is shrinking at the fastest rate in the last 14 years as new order inflows weaken."
He added, "The magnitude of the decline in new business is worrying as domestic demand weakens and new orders from overseas fall further and significantly."
In addition, factory job cuts are the largest since October 2020 as order volumes in the U.K. and abroad have fallen.
A similarly pessimistic outlook was issued last month by the British Manufacturing Association, which predicted a 3.2% decline in the sector's output in 2023.
S&P Global noted that "the main reason for the loss of export contracts is weak global economic conditions, but also related to Brexit matters, such as shipping delays and rising costs, causing some EU customers to source products elsewhere."
Martin Beck, chief economic advisor at the EY ITEM Club, a U.K. economic forecasting group, said, "These results are the latest in a series of weak indicators ...... which suggest GDP could fall again in the fourth quarter of 2022. Moreover, this situation is unlikely to improve in the near future as the squeeze on household and business finances is set to continue."
Less than three months into his tenure, British Prime Minister Sunac is facing multiple crises, including record cost of living increases, disruptions to the health care system and rail service system due to the strike movement, and an economy that may already be in recession.
More workers are joining strikes over pay, the British rail system is facing near paralysis, and the NHS is in jeopardy.
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