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Highlights
- According to the S&P Global/CIPS composite PMI, the UK output slumped to 47.2 in October.
- The growth in the private sector has slowed down to a 21-month low.
The UK's economy has been struggling to find answers to rising inflation and the soaring cost of living crisis for quite some time. The inflation in Britain hit the 40-year high mark yet another time, rising above 10% for the first time since 1982 on the back of annual consumer price inflation.
But to make things worse, business activity in Britain also slowed in October. In fact, the private sector's growth has slowed to a 21-month low. Political turmoil added to the misery, with the output declining for the third consecutive month.
According to the S&P Global/ CIPS composite purchasing managers index (PMI), the UK output slumped to 47.2 in October from September's 49.1 reading. Notably, anything under 50 shows contraction for the economy, while anything over is seen as growth.
Political and Economic instability
Meanwhile, business activity across the services sectors shrank for the first time in 20 months and at the fastest since January last year. The contraction can be attributed to several reasons, such as shortage of supplies, lack of staffing, Covid-19 lockdown and heightened political and economic instability.
The CIPS said it wasn't surprising to see the decline as businesses throughout Britain are quite affected and worried about the recent events. CIPS listed reasons such as the soaring cost of living, rising interest rates, and political upheaval. Due to this, manufacturing and service sectors have witnessed a slowdown, resulting in contracting to a two-and-a-half-year low.
S&P's chief business economist Chris Williamson indicated that October's flash PMI data had dipped rapidly before adding that the business confidence's slide has been unlike anything seen before in 25 years of survey history.
Amid this, Kalkine Media® deeps dive into three stocks on which investors may keep their eye.
GlaxoSmithKline plc (LON: GSK)
British medicines, vaccines and consumer healthcare products manufacturer on 24 October was down by -0.69% at 12:18 PM (GMT +1). With a market cap of £56,634.17 million, GSK was trading at GBX 1,382.80. The FTSE 100 constituent's one-year return stood at -2.70%; on a YTD basis, its return stood at -13.97%. GSK enjoyed a positive EPS (earnings per share) of 1.10 with a turnover (on book) at £10,493,701.69.
Whitbread Plc (LON: WTB)
Whitebread Plc is an FTSE 100 listed firm with a market cap of £5,190.10 million. The British hospitality firm's shares were up by 4.24% at GBX 2,678.00 as of 9:49 AM (GMT+1) on 24 October. The WTB stock has given its shareholders a return of -14.07% in the past year and of -10.45% on a YTD basis.
Wetherspoon Plc (LON: JDW)
The British pub operator owns and operates pubs throughout Great Britain. Witnessing a gain of 2.07%, Wetherspoon was trading at GBX 433.20 on 24 October. With an EPS of 0.15, JDW has given its investors negative returns of over -54.65% and -55.03% in the past one year and on YTD basis respectively.
Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
