United Kingdom PMI

United Kingdom

United Kingdom: Manufacturing PMI moderates to lowest level in 17 months

October 1, 2014

The manufacturing Markit/CIPS Purchasing Managers’ Index (PMI) inched down from 52.2 in August to 51.6 in September. The figure marked the lowest level in 17 months. Despite the drop, the index remains above the 50-threshold that separates expansion from contraction in business conditions, where it has remained since February 2013.

According to Markit/CIPS, a fall in the PMI index was mainly driven by weaker increases in production as well as by a slowdown in inflows of new business. In addition, overseas demand has weakened due to the ongoing lethargy of the Eurozone and the appreciation of the pound. Markit/CIPS stated that, “the strong upsurge in the UK manufacturing sector at the start of the year appears to have run its course.” September’s disappointing reading will add uncertainty to the Central Bank over whether the economy is ready for higher interest rates.

FocusEconomics Consensus Forecast panelists see fixed investment rising 7.4% in 2014, which is down 0.6 percentage points from the previous month’s estimate. For 2015, the panel expects fixed investment to increase 6.7%.

Author:, Senior Economist

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United Kingdom PMI Chart

United Kingdom PMI September 2014

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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