Business optimism in the UK declined as the private sector shrinks

According to data released today, the private sector in the UK shrank in October, with the least amount of optimism regarding growth expectations this year.

October saw a little increase in the headline seasonally adjusted S&P Global/CIPS UK Services PMI Business Activity Index from 49.3 in September to 49.5, which was higher than the previous 'flash' estimate of 49.2.

Companies frequently stated that low consumer confidence, high loan rates, and pressures related to the cost of living were preventing customers from making purchases.

October saw more job losses, which was indicative of a decline in new orders and a lack of confidence in the company's future.

The level of optimism among service organisations about growth prospects one year from now was at its lowest point in 2023.

"A shallow downturn in UK service sector activity persisted in October as businesses struggled to make headway against a backdrop of worsening domestic economic conditions and stretched household budgets," said Tim Moore, director of economics at S&P Global Market Intelligence.

"Forward-looking survey indicators suggested that service providers will continue to skirt with recession."

(Sources: proactiveinvestors.co.uk, investing.com)