United Kingdom manufacturing PMI falls more than expected in June

by Susie Olson July 4, 2017, 0:32
United Kingdom manufacturing PMI falls more than expected in June

But British manufacturing grew more slowly than expected as consumers faced the double-hit of accelerating inflation - caused in large part by the fall in the pound since last year's vote to leave the European Union - and by slowing wage growth. the U.K. PMI fell to 54.3 from a downwardly-revised 56.3 in May, a three-month low and below all forecasts in a Reuters poll of economists that pointed to a reading of 56.5. "Export growth strengthened and business optimism remained elevated", the report explained.

While the figure fell short of forecasts, it also marked the eleventh consecutive month of expansion in the sector and, at 55.9, the average PMI level over the second quarter as a whole was the best registered for three years.

June's reading was the highest since April 2011 and was comfortably above the 50 level that separates growth from contraction.

The report showed that production level index for manufacturing sector grew for the fourth consecutive month in June 2017. "The manufacturing sector is clearly in expansion mode and looks poised for continued robust growth in coming months", Williamson said.

"On a more cheerful pitch, the PMI survey showed strong foreign demand for Indian-manufactured products in June".

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Dobson explained that the main factor driving the broad slowdown in June was a steep easing in the rate of increase in new order intakes.

"Export orders remained disappointingly lacklustre despite the ongoing competitiveness boost of the weak sterling exchange rate", he said.

The pickup is consistent with other indications that economic growth in the currency area accelerated in the three months to June, having already speeded up in the first quarter.

Manufacturing accounts for around 10 per cent of UK GDP output.

"Based on the inventory trends and confidence around future output, the June reading was more like a temporary rebound, with an economic downtrend likely to be confirmed later", Zhong said. Alongside reports of a deceleration in the rate of expansion of new orders from the domestic market, manufacturers also noted that new export business rose at a weaker pace.

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