U.K. flash manufacturing and services PMI indices fall to record lows in April

U.K. business sentiment saw another sharp impact lower in April in the midst of the current lockdown situation. The 'flash' manufacturing and services PMIs saw the largest monthly deteriorations on record. The manufacturing PMI index fell 14.9 points to 32.9, whereas the services PMI index fell 22.2 points to 12.3.

In particular for services, the latest outturn surpassed the previous low set during the financial crisis, of 40.1, while for manufacturing the previous low was 34.5. The composite PMI also recorded its sharpest single month fall of 23.1 points, declining to a ‘new’ all-time low of 12.9.

As expected, most of the deterioration in business sentiment was mainly linked to Covid-19 and was seen in a sharp fall in new order flows – with demand from both domestic and export markets falling sharply throughout both the manufacturing and services sectors. Accordingly, firms’ output declines, while employment also eased back, noted Lloyds Bank in a research report.

Markit stated that today’s PMI readings would be in line with GDP falling at a quarterly rate of around 7 percent. Nevertheless, the PMI reports exclude the vast majority of output that is generated by the self-employed and that in the retail sector.

“The latter being an area that has likely to have been severely affected by lockdown restrictions and reduced footfall. Recent comments on UK GDP from BoE Governor Andrew Bailey reiterated the Office for Budget Responsibility’s view, “…that it was “reasonable to expect a 35 percent drop in the second quarter””, added Lloyds Bank.