The latest IHS Markit / CIPS Flash UK Composite PMI data revealed a decline in private sector output for the second month running in December.

At 48.5, down from 49.3 in November, the seasonally adjusted IHS Markit / CIPS Flash UK Composite Output Index – which is based on approximately 85% of usual monthly replies – pointed to a modest reduction in overall business activity. Moreover, the rate of decline was the fastest recorded since July 2016.

December data pointed to lower volumes of service sector output and a much sharper drop in manufacturing production, with the latter falling to the greatest extent for almost seven and-a-half years. Survey respondents overwhelmingly attributed lower business activity to a combination of domestic political uncertainty, a lack of clarity in relation to Brexit and subdued global economic conditions. 

The seasonally adjusted Flash UK Manufacturing PMI – a composite single-figure indicator of manufacturing performance – dropped to 47.4 in December, from 48.9 in November, to signal the sharpest downturn in overall business conditions since August.

Service sector output declined only slightly during December. At 49.0, down from 49.3 in November, the seasonally adjusted Flash UK Services PMI Index remained below the 50.0 no-change level for the second month running.