UK DATA: Underlying details softer in PMI prints; another step towards a Dec cut

It was a mixed UK PMI with the flash November services PMI coming in softer than expected at 50.5 (52.0 consensus, 52.3 Oct) but the manufacturing PMI beating expectations and coming in at 50.2 (49.2 consensus, 49.7 Oct). The composite PMI was softer than expected at 50.5 (51.8 consensus, 52.2 Oct). Looking at the details, services reported a "decline in new work for the first time since July".

• This part of the press release will give Governor Bailey confidence to cut in December "Average output prices meanwhile rose at their slowest rate in nearly five years, even as input price pressures accelerated. Amid tight margins and heightened policy uncertainty, firms reduced their headcounts more aggressively than in October."
• Overall, this is another hurdle out of the way for Bailey, but note that flash PMI data comes early in December and will be published on the Tuesday of the MPC meeting week - so there will be another flash print for both the MPC and market to digest ahead of the December MPC decision. Bailey will likely take particular comfort from the report noting that output prices are not rising despite higher costs - meaning that soft demand is restricting inflation momentum.

Other highlights from the press release:

• "Private sector employment fell at its fastest pace in four months during November. Both services and manufacturing sectors experienced a quicker reduction in staffing levels than in the previous survey period, with services firms facing a notably sharper decline. Anecdotal reports suggested that companies were hesitant to replace leavers due to lower demand and policy uncertainty, with some focused on investing in technology as an alternative to hiring. Additionally, elevated salary pressures prompted several firms to cut staff numbers."
• "Average output charges in the private sector rose only marginally in November, marking the slowest rate of inflation in nearly five years. Service sector charge inflation eased considerably, while manufacturers recorded an outright decline in factory gate prices for the first time since October 2023. Several businesses noted that subdued client demand and increased competition had weighed on their ability to lift prices."
• "Average cost burdens increased markedly in November, with the rate of inflation accelerating for the first time since August. Services firms reported a sharper rise compared to October, often citing higher wages, increased goods prices, and a weaker exchange rate against the euro as key drivers. Manufacturing expenses also grew, but at the softest pace in just over a year, as some producers indicated reduced pressure on supplier prices."