Purchasing data hints that a recession is near

A double batch of new data on confidence among purchasing managers in manufacturing and services suggests that economic conditions in the UK are deteriorating quickly increasing the risks of a recession in the next twelve months. The Purchasing Managers survey’s headline index of overall conditions in the economy’s most crucial industries slumped to just 47.1 for last month. On a scale where any reading under 50 indicates contraction, this was the second month in a row that the numbers came in well below 50 and the downward slide is clearly apparent in our chart. Indeed this was the weakest reading on sentiment among buyers of raw mateials and components since the Autumn of 2001 and the immediate aftermath of the 9-11 attacks. Purchasing Managers data is often regarded as a lead indicator of turning points in the economic cycle.