UK manufacturing and services activity slump to eight-month low

UK manufacturing and services activity slump to eight-month low

Manufacturing and services activity slumped to an eight-month low in January as the combined impact of the Covid pandemic and higher barriers to trade that followed the Brexit deal took its toll on businesses.

Service industry companies were the hardest hit after the government imposed a third lockdown, which shut thousands of shops, gyms and theatres, and restricted consumer spending.

The IHS Markit/CIPS composite flash survey of the manufacturing and services industries registered a drop in the purchasing managers index (PMI) to 40.6 from 50.4 in December with the services industry taking a bigger fall to 38.8. A figure below 50 indicates contraction and the drop exceeded economists' forecasts by some margin.

Q&A

What are PMIs?

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The purchasing managers' indices, or PMIs, track services sector companies, manufacturers and building firms around the world.

They measure activity, output, business confidence and hiring levels, to produce a health check on how these sectors are performing.

PMIs are compiled each month from interviews with 'purchasing managers' at thousands of companies. They produce a single headline figure - anything above 50 indicates a sector is growing, while a figure below 50 shows a contraction.

Economists watch these surveys closely as they look ahead to coming months, while the official data, such as