UK PMI dropped to 52.7 in November from October’s 16 month high

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 1, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Mumbai) - The latest reading of the UK's PMI showed that the country’s manufacturing sector is growing at a slower pace than before. The Markit/CIPS manufacturing PMI is reported to have dropped to 52.7 in November from a 16-month high recorded in October. In October the PMI had stood at 55.2. The UK PMI for November registered is lower than the 53.6 expected. Exports have however not let down, recording the fastest growth in orders since August 2014.

    Markit and the Chartered Institute of Procurement & Supply, which jointly produce the survey, today said rising levels of incoming new business have supported the manufacturing sector. Production expanded for 32 months in a row.

    Selling price of manufacturers fell further adding to deflation

    The manufacturing growth slowed in November from the fast pace recorded in October. However it has managed to stay above the uninspiring rates seen earlier in the year, supported by a pick-up in export orders.

    Employment in this sector suffered, dropping fractionally after registering a solid gain in October. Manufacturers' raw materials costs and selling prices also fell adding to the already existing deflationary pressure caused by low prices.

    Markit economist Rob Dobson opined that manufacturing though has grown at a moderate pace is not much of a drag. Markit's surveys have presented a more encouraging picture of the sector than official data, which has shown the sector stagnant and even contracting since the beginning of 2015.

    Expansion driven by the service sector

    According to Markit, the country’s expansion has primarily been driven by services. This sector will have to repeat its performance if the economy has to grow at the 0.6 per cent quarterly rate in the last quarter of this fiscal as forecast by the government. The PMI survey today showed consumer goods manufacturers were performing extremely well. It was also noted that greatest growth in export orders came from the United States, Germany, the Middle East and East Asia.

    In 2014 Britain was the fastest-growing major economy. It is poised to repeat its performance this year too. Growth in the current year will heavily be driven domestic demand. According to policymaker Gertjan Vlieghe, this is primarily the reason why the BoE did not to rush into raising interest rates.
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