3 May 2016
UK manufacturing PMI points to further loss of economic momentum - ING
James Knightley, Senior Economist at ING, notes that the UK manufacturing PMI drops to a 3 year low, offering further evidence that Brexit worries are weighing on the economy
Key Quotes
“The UK manufacturing purchasing managers’ index has surprisingly dropped back into contraction territory, coming in at 49.2 in April versus a downwardly revised 50.7 reading for March. This is worse than the 51.2 consensus expectation and is the weakest reading since March 2013.
Brexit worries have been sapping confidence and leading firms to pull back on investment and hiring and now we have evidence that orders and activity are starting to shrink. The UK has already been losing momentum, as indicated by 1Q GDP, but this report suggests that the outlook for 2Q16 is even worse.
Should the UK vote to stay in the EU then we believe that activity will bounce back as the outlook clears in an environment of relative sterling softness. However, should the UK leave then the activity story will weaken further and likely prompt BoE policy easing with sterling coming under significant selling pressure.”
Key Quotes
“The UK manufacturing purchasing managers’ index has surprisingly dropped back into contraction territory, coming in at 49.2 in April versus a downwardly revised 50.7 reading for March. This is worse than the 51.2 consensus expectation and is the weakest reading since March 2013.
Brexit worries have been sapping confidence and leading firms to pull back on investment and hiring and now we have evidence that orders and activity are starting to shrink. The UK has already been losing momentum, as indicated by 1Q GDP, but this report suggests that the outlook for 2Q16 is even worse.
Should the UK vote to stay in the EU then we believe that activity will bounce back as the outlook clears in an environment of relative sterling softness. However, should the UK leave then the activity story will weaken further and likely prompt BoE policy easing with sterling coming under significant selling pressure.”