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UK Economy Shrinks, New Lockdown Shuts Services Firms PMI

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British business activity has contracted in November as a new wave of coronavirus restrictions hammered the huge services industry, but news of possible vaccines have boosted hopes for 2021, a survey showed on Monday.

An early flash reading of the IHS MarkitCIPS UK Composite Purchasing Managers Index PMI, a gauge of private sector growth, tumbled to a fivemonth low of 47.4 in November from 52.1 in October.

It is the first time the index has gone below the 50.0 growth threshold level since June.

A Reuters poll of economists had pointed to an even bigger decline to 42.5.

Britains economy is widely expected to contract in the fourth quarter albeit by less than it did around the time of the first coronavirus lockdown after Prime Minister Boris Johnson ordered a fourweek lockdown for England.

Other parts of the United Kingdom have also imposed restrictions on businesses, including in hospitality and other facetoface activities.

Those closures helped to push the services PMI to 45.8 from 51.4 in October.

But manufacturing, which was largely unaffected by the latest lockdown, accelerated with its PMI rising to 55.2, the jointhighest level since 2018.

The approach of a possible trade shock at the end of next month, when Britains postBrexit transition deal with the European Union will expire, prompted clients of British factories to increase their orders to build up stocks.

That in turn lead to a sharp lengthening of supplier delivery times because of severe delays at…

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