LONDON (dpa-AFX) - The British private sector grew at its slowest pace in two months as services continued to expand while manufacturing sunk to its lowest in over a year, preliminary results of the purchasing managers' survey by S&P Global showed on Friday.
The flash Composite Output Index fell to 50.5 from 50.6 in January, in line with economists' expectations. A reading above 50 suggests growth in the U.K. private sector.
The flash Purchasing Managers' Index for manufacturing dropped to a 14-month low of 46.4 from 48.3 in January. The score was expected to improve slightly to 48.4.
The flash services PMI climbed to 51.1 in February, its highest in two months, from 50.8 in January. Economists had expected the reading to remain unchanged.
The survey data was collected from February 10 to 19.
'Early PMI survey data for February indicate that business activity remained largely stalled for a fourth successive month, with job losses mounting amid falling sales and rising costs,' S&P Global Market Intelligence Chief Business Economist Chris Williamson said.
'The lack of growth alongside rising price pressures points to a stagflationary environment which will present a growing dilemma for the Bank of England.'
The PMI survey showed revealed demand erosion as total new work decreased for the third month running and at the fastest pace since August 2023.
Higher payroll costs and weak demand led to the worst fall in staffing numbers since November 2020. Meanwhile, average costs increased at the fastest pace in 21 months, mainly due to wage pressures. Consequently, both manufacturers and service firms raised their charges robustly.
Business confidence in the overall private sector improved slightly from the 25-month low in January on stronger hopes of growth and increased sales in future. However, businesses noted severe headwinds from the broader macroeconomic environment and rising geopolitical uncertainty, the survey said.
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