According to new data, the private sector in the UK declined in November as the national lockdown in England ended four months of expansion.
The closely followed IHS Markit / CIPS Flash UK Composite PMI data showed a value of 47.4 so far this month. Anything under 50 is seen as a decrease in activity. The October reading on the same point was 52.9 and 56.5 in September.
The downturn was triggered by the fastest decline in leisure and hospitality businesses since May, as pubs, restaurants and bars closed under new lockdown measures.
However, the looting was offset by a boost in production as suppliers had products in stock ahead of the Brexit transition period ending this year.
This, in turn, is causing major delays in UK ports and product price increases as companies rush to prepare for the future relationship with Europe, which is still under negotiation.
Chris Williamson, chief business economist at IHS Markit, said: “A double dip is indicated by the November survey data, with lockdown measures again causing business activity to collapse in much of the economy.
“As expected, hospitality businesses have been hit hardest, with hotels, bars, restaurants and other consumer-facing service providers reporting the strongest downturn.
“Some consolation comes from the data suggesting that the impact of the lockdown was not as severe as it was in the spring, and production has also received a significant boost from the build-up of inventories and a surge in exports prior to departure from the UK out of the EU by the end of the year, which is an incentive for many companies.
“While the lockdown will be temporary, this pre-Brexit will also get a boost.”
Business optimism was higher for November, with companies hoping for the various vaccine news to emerge.
But fears remain that the massive amount of expected layoffs in the services sector will have a knock-on effect on the entire economy.
Duncan Brock, group director at CIPS, said, “The news of potential vaccines that will bring a return to normalcy has pushed the mood to its highest level since March 2015, with a major rise in optimism.
“But in the meantime, with service companies still cutting jobs at breakneck speed, the new year will be difficult as another recession looms.”