• Flash UK Composite Output Index slumps to a six month low, and so does the IHS Markit UK Household Finance Index.
Laith Khalaf, financial analyst at AJ Bell comments on the latest IHS readings:
“The winter lockdown has pushed the economy backwards once again as much of the high street has been forced into hibernation to quell the spread of the virus. More positive vaccine news from Astrazeneca provides some consolation, but the question now is just how much damage the economy will sustain before the science rides to the rescue.
“The Household Finance Index also slumped to a six month low with savings declining at their fastest rate for seven years. Household finances are coming under pressure just as Christmas has now clearly emerged on the horizon with Black Friday deals enticing consumers to part with their cash in search of a quick bargain.
“While the current restrictions are shorter and less onerous than the first lockdown, cumulatively they apply more pressure to those household budgets which were already under strain. The usual seasonal spending spree may also be kicking off early, as consumers use their plentiful leisure time to get the Christmas shopping done sooner rather than later.
“The UK’s manufacturing sector was a bright spark in an otherwise bleak set of November readings. Manufacturers experienced a Brexit bump from companies stockpiling ahead of the end of the transition period in order to secure their supply lines for a little longer. That’s a temporary fillip and may simply prove to have brought demand forward.
“While we can expect the economy to shrink in the fourth quarter, a double dip recession can’t be inked in just yet. That would require two quarters of negative growth, so the first three months of next year would have to be worse than the last three months of this one. A vaccine won’t ride to the rescue in time to save the first quarter of 2021 so much will depend on whether we can avoid a third national lockdown after Christmas.”
