Strong business growth and record price pressures this month should give the “green light” for a pre-Christmas interest rate hike, according to a closely-watched survey.
November’s purchasing managers’ index (PMI) showed growth slipping very slightly from the month before but still pointing to an end-of-year pick up for the economy after a third quarter slowdown, despite continued supply chain disruption.
There was also a ninth month in a row of job gains – though the pace slackened off to its slowest pace since the spring, according to the poll.
The Bank of England held off on raising interest rates earlier this month, despite inflation pressures, partly because it wanted to wait for a clearer picture to emerge of how employment would be affected by the end of the furlough scheme in September.
Rate setters will hold their next meeting nine days before Christmas.
Chris Williamson, chief business economist at IHS Markit, which compiled the survey, said: “A combination of sustained buoyant business growth, further job market gains and record inflationary pressures gives a green light for interest rates to rise in December.”
The PMI poll showed cost burdens again increasing at their highest pace since the survey began more than two decades ago – due to higher wages as well as fuel, energy, and raw materials prices.
Customer demand also continued to rise sharply, despite these higher costs being passed through to them by companies, the figures showed.
The cross-sector “composite” PMI reading for the month of 57.7 – where the 50-level separates growth from contraction – was slightly down from 57.8 in October.
Bank of England rate-setters hold their next…
Source : skynews
