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U.K. Economy on Course for Contraction as Services Falter

David Goodman

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The U.K.’s dominant services sector was the weakest since March last month as new work dried up.

With the nation under a cloud of political uncertainty from Brexit and the looming election, IHS Markit’s Purchasing Managers Index for the industry fell to 49.3 in November, the firm said Wednesday. That’s a slightly shallower slowdown than indicated by a flash estimate of 48.6.

The pound held gains after the report and traded at $1.3041 at 9:38 a.m. in London.

Still, the assessment of the economy remains bleak, with the firm saying its composite reading was consistent with a 0.1% quarterly contraction.

“November’s PMI surveys collectively suggest that the U.K. economy is staggering through the final quarter of 2019,” said Tim Moore, economics associate director at IHS Markit.

Key Insights

Incoming work fell for a third month, while demand from export markets dropped at the fastest pace since the index began in 2014“A number of firms reported that a lack of clarity in relation to Brexit had resulted in delays to business investment decisions among overseas clients,” Markit saidA measure of optimism among firms improved to a four-month high, although firms noting this was “contingent on hopes of a more stable political and economic landscape”Companies are focusing on existing contracts as they struggle to get new work, leading to a loss in jobsA measure of input cost inflation eased to its lowest in more than three years

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November’s figures are the first to reflect Markit’s new reporting process, where a flash estimate, based on 85% of responses, is followed by a final reading.This week’s readings are the last before the U.K.’s election on Dec. 12

To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Brian Swint

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