United Kingdom PMI April 2016

United Kingdom

United Kingdom: Manufacturing PMI drops to contractionary territory in April

May 3, 2016

The manufacturing Markit/CIPS Purchasing Managers’ Index (PMI) dropped from 50.7 in March to 49.2 in April, thus hitting the lowest level on record. As a result, the index is now below the 50-threshold that separates expansion from contraction in business conditions. This is the first time the index crosses the threshold since March 2013.

According to Markit/CIPS, April’s drop was mainly due to a deterioration in output. Moreover, new export orders fell for the fourth consecutive month in April amid global economic growth. In addition, job cuts were reported again in April, with losses mainly concentrated in large-sized companies. Markit/CIPC analysts added that, “manufacturers are emphasising slower domestic demand growth and declining new export orders as the key weaknesses they are facing, amid rising uncertainty about the global economy, the oil & gas industry, retail sector and the EU referendum. With this backdrop unlikely to change in the coming months, the second quarter is likely to remain a bleak landscape for industry.”

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%.

Author:, Senior Economist

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United Kingdom PMI Chart

United Kingdom PMI April 2016

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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