UK economic activity hit as weak demand and labour shortages bite The S&P/CIPS global flash UK composite purchasing managers’ index dropped to 50.9 in August from 52.1 last month, its lowest since February 2021 and close to the 50 level that separates growth from contraction. Output in the services sector remained in growth, edging down to 52.5 from 52.6 the previous month, but still the pace of growth was the slowest since the lockdown early last year. Manufacturing contracted following a steep decline in customer demand, staff shortages and long delivery times for materials. Annabel Fiddes, economics associate director at S&P Global Market Intelligence, said: “The UK private sector moved closer to stagnation in August, as mild growth of activity across the service sector only just offset a deepening downturn at manufacturers.” She added: “Waning customer demand amid the weaker economic outlook, and shortages of both staff and inputs, were reported to have hit goods producers hard, with firms registering the quickest drops in output and new work since May 2020. Excluding the initial phase of the pandemic in early 2020, the reduction in manufacturing output was the quickest seen since the start of 2009. Meanwhile, the service sector registered the weakest increase in activity since the recovery began in early 2021.”