UK DATA: Feb Flash PMI Will Make For Difficult Reading For the MPC

The UK February flash manufacturing PMI dipped to 46.4 (vs 48.5 cons, 48.3 prior), while services was a touch stronger than expected at 51.1 (vs 50.8 cons and prior). This was the weakest manufacturing PMI since December 2023.

The survey will make for difficult reading for the BOE MPC, with demand weakness weighing on orders and employment and input cost increases being passed onto output charges.

Key notes from the release:

• “Private sector firms indicated a further steep decline in staffing numbers, largely in response to higher payroll costs and weak demand”
• “Anecdotal evidence often cited a lack of new work to replace completed projects and cautious spending among clients in response to general concerns about UK economic prospects. Some service providers also noted that heightened global business uncertainty had weighed on growth in February”.
• In manufacturing, “lower production was attributed to falling sales in both domestic and overseas markets, alongside a lack of confidence regarding the near-term demand outlook”.
• “Moderate reduction in total new business received by UK private sector firms”…” respondents widely commented on cutbacks to clients’ budgets and lacklustre business investment spending”.
• “Input cost inflation accelerated for the fourth month running”… “. Intense cost pressures were mainly linked to higher salary payments and the impact of suppliers seeking to pass on forthcoming increases in employers’ National Insurance”…”The latest survey also pointed to robust increases in prices charged by both manufacturers and service providers”.