Make UK comment on PMI data

Commenting on today’s PMI data, Fhaheen Khan, Senior Economist at Make UK, said:

“Today’s figure highlights easing cost pressures from the top of supply-chains are filtering down into the price of goods giving hope that inflation could be easing, even if at a snail’s pace. However, falling inflation could also be a sign of declining demand as the data shows orders books are not increasing at the rate industry had become accustomed to over the last couple of years which will worry growing businesses.

“Yet the decrease in cost pressures because of falling demand is good news for rate setters who have been battling inflation for over a year. However, the expected impact of a cooling jobs market appears to be taking shape too. Manufacturers are reporting reduced hiring and even redundancies in some cases as businesses react to weaker economic conditions by trimming the excess weight built up over the last few years in response to unprecedented consumer demand. While this could mean raising interest rates is working to tackle inflation, rate setters must be wary of the resulting impact of higher unemployment which could stunt economic growth even more so than inflation.”