Omicron hits UK businesses hard in December

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© Reuters. FILE PHOTO: Shoppers take a look at bread in a Sainsbury’s grocery store, amid the coronavirus illness (COVID-19) outbreak, in London, Britain January 12, 2021. REUTERS/Henry Nicholls/File Photo

LONDON (Reuters) – The unfold of the Omicron variant of coronavirus has hammered British hospitality and journey firms this month, sending non-public sector progress to a 10-month low, a survey confirmed forward of Thursday’s Bank of England coverage announcement.

The preliminary “flash” IHS Markit/CIPS UK Composite Purchasing Managers’ Index (PMI) sank to 53.2 in December from 57.6 in November.

While nonetheless above the 50 dividing line between progress and contraction, a Reuters ballot of economists had pointed to a a lot stronger studying of 56.4.

The survey confirmed slower progress in new orders and worth pressures – one thing that may have been famous by the BoE’s rate-setters who had entry to the PMI in advance of their December coverage determination, attributable to be introduced at 1200 GMT.

Inflation has soared globally this 12 months attributable to greater vitality costs and COVID-related supply-chain bottlenecks. In Britain, post-Brexit commerce and migration obstacles have added to the issues.

The BoE has stated rates of interest will virtually definitely have to rise to carry down inflation pressures, but it surely held off on a extensively anticipated transfer final month attributable to uncertainty concerning the impression of the tip of the federal government’s job furlough programme.

Data subsequently confirmed no hit to the labour market, however Thursday’s PMI steered faltering financial progress attributable to the Omicron variant and restrictions to sluggish its unfold is now the primary draw back danger.

“Activity fell sharply in the hotels, restaurants, travel and transport sectors, and ground to a halt in other consumer-facing businesses,” stated Chris Williamson, chief enterprise economist at IHS Markit.

“The pace of economic growth looks likely to continue to weaken as we head into 2022.”

The PMI for the companies sector fell sharply to 53.2 in December from 58.5 in November, reaching its lowest degree since February and beneath all forecasts in the Reuters ballot that had pointed to a studying of 57.0.

The survey’s gauge of optimism hit a 14-month low.

“Concerns about prolonged pandemic restrictions and the subsequent hit to business and consumer confidence had a negative influence on growth expectations for 2022,” IHS Markit stated.

Manufacturers have fared higher this month.

The manufacturing unit PMI’s output index rose to 53.3 in December from 52.7 in November, a four-month excessive, due to an easing in provide chain issues which have persevered for greater than a 12 months.

Export orders have fallen once more, nonetheless.

“Brexit-related trade difficulties featured prominently in the comments from survey respondents that saw a drop in export sales during December,” IHS Markit stated.

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