LONDON, Aug. 23 (Xinhua) -- Business activity growth across the United Kingdom's (UK) private sector was the slowest in 18 months in August, as the rate of its expansion pointed to only a marginal increase in output, newly released data showed on Tuesday.

SHARP AND ACCELERATED FALL

The S&P Global / CIPS Flash UK PMI Composite Output Index fell from 52.1 in July to 50.9 this month, with the drop in the headline index largely driven by a faster decline in manufacturing output, the index of which tumbled to 42.4, a 27-month low.

"The UK private sector moved closer to stagnation in August, as mild growth of activity across the service sector only just offset a deepening downturn at manufacturers," Annabel Fiddes, economics associate director at S&P Global Market Intelligence, said.

UK manufacturers signaled a sharp and accelerated fall in production during August, with the rate of reduction the quickest seen since May 2020, the data showed. Reduced customer demand, the delayed delivery of inputs and labor shortages all weighed on performance.

Excluding the initial phase of the COVID-19 pandemic in early 2020, the reduction in manufacturing output was the quickest seen since the start of 2009, Fiddes noted.

On Tuesday, another report also showed that UK manufacturing output volumes fell in the three months to August, marking the first time since February 2021 that output has declined.

Output is expected to be broadly flat in the next three months, significantly reducing expectations from just a few months ago, according to the monthly Industrial Trends Survey of the Confederation of British Industry (CBI) and the information technology company Accenture.

"From rising prices to bottlenecks in supply chains, manufacturers continue to operate against a background of high input costs and significant operational delays," CBI lead economist Alpesh Paleja commented.

RECESSION FEARS

The latest figures come as the UK is projected by the Bank of England to enter recession from the fourth quarter of this year. The latest rise in gas prices had led to another significant deterioration in the outlook for activity, the central bank said in early August.

Looking ahead, the recession in the manufacturing sector will likely deepen over the winter, as extremely high energy prices render some production unprofitable and consumer demand for goods potentially softens, Samuel Tombs, chief UK economist at the consultancy Pantheon Macroeconomics, said.

While the UK is less likely to run out of gas than other European countries, the country's manufacturers would still be adversely impacted through their connections with eurozone suppliers and customers, Tombs added.

A comparison of independent projections published by the UK Treasury in August showed an average forecast of 3.6 percent for gross domestic product (GDP) growth in 2022 and 0.3 percent in 2023, down from May's 3.9 percent and 1.3 percent, or February's 4.4 percent and 2 percent, respectively.

Persistently high inflation continues to cast a shadow over the economy, dampening the outlook. UK inflation will hit 18 percent in early 2023 amid a deepening energy crisis, the U.S. financial services group Citi said on Monday.

UK consumer confidence also hit a new record low in August, the market research company GfK said last Friday. This points to "a sense of capitulation, of financial events moving far beyond the control of ordinary people," Joe Staton, client strategy director at the GfK, commented.

"Just making ends meet has become a nightmare and the crisis of confidence will only worsen with the darker days of autumn and the colder months of winter," Staton added. Enditem

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