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UK consumers are tightening their belts as business activity has contracted for the fifth consecutive month, according to new data that suggests the economy has plunged into a prolonged recession.
UK retail sales fell by 0.4% between October and November, according to figures released by the Office for National Statistics on Friday. Economists polled by Reuters had expected an increase of 0.3%.
Meanwhile, S&P Global’s Flash UK Composite Purchasing Managers Index (PMI), which closely monitors the health of the private sector, rose to 49 in December from 48.2 in November.
Despite the rise, the figure remained below 50 for the fifth straight month, indicating that the majority of companies reported contractions.
The data fuels concerns that the economy is already in a prolonged recession. Gross domestic product declined in the third quarter and is expected to decline further in the fourth quarter.
Chris Williamson, chief business economist at S&P Global Market Intelligence, which organizes the PMI, said December data “increases the likelihood of the UK slipping into recession,” with the PMI showing the last three GDP contracted by 0.3%, he said. month of the year.
Thomas Pugh, economist at consulting firm RSM UK, said: ”
According to separate data from research firm GfK, UK consumer confidence fell below -40 for the eighth month in a row in December, the most pessimistic period in nearly half a century.
Retail sales volume was held back by a 2.8% decline in online shopping. Darren Morgan, director of economic statistics for the ONS, said Black’s Friday shopping his holiday offers “failed to deliver the usual uptick in the sector.”
Non-food and fuel purchases also declined, with only food sales increasing from October to November. Morgan said consumers “are stocking up early in an attempt to spread the cost of the Christmas festivities.”
Accenture UK retail lead Linda Petterick said the data “would be a huge disappointment for retailers” as the World Cup and Black Friday failed to significantly boost sales.
The consumer price index fell slightly to 10.7% last month from a 41-year high of 11.1% in October.
PMI also showed that the number of workers fell for the first time since February 2021. External demand remained subdued in December as well, with overall new export orders falling for the sixth month in a row, according to the survey.
The decline in exports was led by manufacturing, with the relative index declining nearly 2 points to 44.7, its lowest level since May 2020.
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