Mild recovery in December and new lockdown warn that Britain’s economy heads towards recession

Britain’s economy made a mild recovery in December after shrinking during a four-week England-wide lockdown in November.

The composite Purchasing Manager’s Index (PMI), which measures the activity in manufacturing and services sectors, rose to 50.4 in December from 49.0 in November, but fell below expectation for 50.7 rise.

The services PMI, which makes up the largest part of the composite index, rose to 49.4 in December from 47.6 in November, missing 49.9 forecast and remained below 50 threshold which separates growth from contraction, signaling that large services sector failed to fully recover.

December’s data confirm that the UK services sector returned to decline after the partial rebound during the third quarter of 2020, reflecting strong impact of tighter restrictions on services sector, despite some optimism to British businesses on rollout of coronavirus vaccine.

The vaccination started too late to stop a surge in new infections that prompted PM Boris Johnson to set new lockdown which will last until at -least mid-February that further darkens the outlook, as economists expect Britain’s economy to fall back into recession.