UK DATA: PMI data points to stabilising labour market but cost concerns remain

• 3 point upside surprise to manufacturing PMI coming in at 49.6 (46.2 prior), services broadly in line (51.1, 51.1 exp, 50.8 prior) and composite output 0.6 points higher than exp at 51.1 (50.5 exp, 50.1 prior). The labour market and inflation parts will seem concerning for the more dovish members of the MPC - although a slightly stabilising quantities side of the labour market is not really news (its wage growth that is softening that is significant).

Highlights from the press release:

• "October data indicated that private sector job losses moderated to the least marked since May. This reflected slower reductions in workforce numbers in both the manufacturing and service sectors. Anecdotal evidence suggested that elevated salary pressures and excess business capacity had resulted in redundancies and the non-replacement of voluntary leavers."
• "Average cost burdens increased sharply in October, but the overall rate of inflation eased for the second month running to its slowest since November 2024. Service providers recorded a much faster increase in input prices than manufacturers. There were reports that softer raw material price inflation, alongside sterling exchange rate appreciation against the US dollar, had helped to moderate overall cost pressures. Higher food prices, utility bills and salary payments were nonetheless widely reported in October."
• "Output growth remained relatively sluggish in the service economy, with the latest expansion the second-weakest since May. A number of firms cited subdued consumer sentiment, as well as the impact of deferred corporate decision-making ahead of the upcoming November Budget."
• "Manufacturers recorded the fastest upturn in production since September 2024, although the rate of growth was only marginal overall. Higher levels of output were linked to restocking efforts and, in some cases, a tentative turnaround in domestic demand."
• "Falling export sales persisted, however, largely reflecting another steep reduction in the manufacturing sector."