The Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) inched down to 45.9 in July from 46.0 in June – the lowest reading since June 2009.
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Japan’s services Purchasing Managers’ Index (PMI) crossed the 50-point mark during the month of July, a sign of optimism after the contraction witnessed last month as companies shrugged off business backlogs amid a steady revival in new orders, a private business survey showed Wednesday.
“Admittedly, unresolved structural issues mean this pick-up is on borrowed time and we still expect growth to slow again next year”, said Julian Evans-Pritchard of Capital Economics in a report.
The PMI records general economic performance in a given sector, with any reading below 50 representing contraction rather than growth. With lean inventories and solid orders, there is scope for further near-term expansion, although there will be some disappointment over export trends.
‘On that score, the weak numbers provide powerful arguments for swift policy action to avert the downturn becoming more embedded and help to hopefully play a part in restoring confidence and driving a swift recovery’.
But the boost to exports from a weaker pound was less marked than previously estimated, Mr Dobson said.
It said the fall in manufacturing production was its steepest since October 2012, while employment across the industry dropped for the seventh straight month. Sterling fell to a 31-year low against the U.S. dollar after the Brexit vote but has recovered some of that ground since.
The string of reports pointing to a lacklustre performance from the United Kingdom economy has sharpened the focus on this Thursday’s interest rate announcement, with many economists expecting the Bank of England to cut the cost of borrowing and increase quantitative easing in a bid to shore up economic growth.
“Latest data showed that confidence regarding the year-ahead outlook eased further following the European Union referendum, but only to a level last seen in April 2013 and one that is still well above the record lows”.
However, higher output didn’t lead to a commensurate rise in hiring.
The BoE’s chief economist said he would be willing to use “a sledgehammer to crack a nut” in tackling weak growth, but others may prefer to wait for more data and see if the government unveils an autumn package of extra spending or tax cuts.
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Markit’s report showed that the sector had a strong start to the third quarter.
