by Suban Abdulla

LONDON (Reuters) – Activity in Britain grew in November after three months of contraction, but the fall in orders continued in the face of rising interest rates and weak demand, according to the S&P Global economic survey published Thursday.

The “flash” composite index covering the services and manufacturing sectors reached 50.1 in November, compared to 48.7 in October and a consensus of 48.7.

The index exceeds the threshold of 50, which separates growth and contraction in activity, for the first time since July.

“Relief from the pause in interest rate rises and a sharp slowdown in inflation are helping to support business activity, although the latest survey data suggests general stagnation in UK GDP over the last quarter 2023″, according to Tim Moore, economic manager at S&P Global Market Intelligence.

The new orders subindex fell for the fifth straight month, which S&P Global said reflects continued weakness in the economy.

The British economy suffered from the highest rate of inflation among developed countries and its gross domestic product failed to grow in the third quarter. But the pace of price growth slowed more than expected to 4.6% in October, prompting the Bank of England to hold interest rates steady at its last two meetings.

The PMI index for the services sector is growing, at 50.5, but that of the manufacturing sector stood at 46.7, a six-month high, which still signals a rapid decline in activity.

Companies responding to S&P’s survey reported an uptick in already substantial input cost inflation and noted “strong” wage growth that led to higher prices.

Overall, while businesses were more optimistic about their prospects for the year ahead, forward-looking indicators showed that recession risks are likely to remain high next year.

(Reporting Suban Abdulla, Corentin Chappron, editing by Kate Entringer)

Copyright © 2023 Thomson Reuters