United Kingdom PMI July 2016

United Kingdom

Manufacturing PMI deteriorates sharply in July

The manufacturing IHS Markit/CIPS Purchasing Managers’ Index (PMI) decreased from 52.4 in June to 48.2 in July. The figure came in below the 49.1 reported in the preliminary estimate and marked the lowest reading in more than three years, dragging the index under the 50-threshold that separates expansion from contraction in business conditions.

According to IHS Markit/CIPS, July’s decrease was due to a deterioration in production, which contracted at the steepest rate since October 2012 as the domestic market was hit by the uncertainty surrounding the Brexit vote. Conversely, new export businesses improved in July, which broadly reflected the sharp depreciation of the pound. IHS Markit/CIPC analysts added that, “the pace of contraction was the fastest since early-2013 amid increasingly widespread reports that business activity has been adversely affected by the EU referendum. The drops in output, new orders and employment were all steeper than flash estimates.”

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 2

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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