United Kingdom PMI July 2016

United Kingdom

Manufacturing PMI deteriorates sharply in July

The manufacturing Markit/CIPS Purchasing Managers’ Index (PMI) decreased from 52.1 in June to 49.1 in July according to a flash estimate. As a result, the index is now resting below the 50-threshold that separates expansion from contraction in business conditions. The reading marked the lowest figure in over three years.

According to Markit/CIPS, July’s decrease was due a deterioration in both output and new orders. Conversely, the new export businesses improved in July broadly reflecting the sharp depreciation of the pound. Markit/CIPC analysts added that, “the downturn, whether manifesting itself in order book cancellations, a lack of new orders or the postponement or halting of projects, was most commonly attributed in one way or another to ‘Brexit’. The one ray of light was an improvement in manufacturing export growth to the best for two years as the weak pound helped drive overseas sales, though producers also suffered the flip-side of a weak currency as import prices spiked higher.”

FocusEconomics Consensus Forecast panelists see fixed investment rising 4.0% in 2016, which is down 0.4 percentage points from the previous month’s estimate. For 2017, the panel expects fixed investment to increase 4.4%.

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United Kingdom PMI Chart

United Kingdom PMI July 2016 0

Note: Markit/CIPS United Kingdom Purchasing Managers’ Index (PMI). A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction.
Source: Markit and CIPS.

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