Markit Economics’ manufacturing purchasing manager’s index for July came in at an eight-month high of 52.9, as expected. “Input cost inflation softened and while output prices were raised at the quickest pace in three months, the rate of change inflation was only slight”, the report said.
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For both the services and manufacturing sectors, Germany maintained its dominant position and there will be further concerns surrounding the performance outside Germany, which will increase potential internal friction. Although the rate of expansion was the sharpest in 42 months, the latest rise was only fractionally stronger than the long-run average. The services activity fell to the lowest level since March 2009 in July. This was only slightly down on the score of 46 recorded in June – which was already a three-year low – and marginally above expectations.
NIESR has said it does not expect the slowdown to match that seen during the global financial crisis – Britain’s worst recession since at least the 1930s – and Markit said there is “substantial uncertainty about the extent of any downturn”.
The survey said the level of new export orders ticked up for the second successive month in July, as companies also pushed to secure contracts. The PMI is already deep into territory which would normally spur the Bank of England into taking action to stimulate the economy.
The euro area private sector expanded more than estimated in July, final survey data from Markit showed Wednesday.
“Today’s confirmation of the downturn in the Services PMI should not be underestimated, with significant near-term implications for United Kingdom businesses”. The latest expansion was aided by both the recent depreciation of the sterling exchange rate and efforts by companies to secure new contracts.
The sub-index for sectors with high energy consumption fell 0.5 percentage points to 47.7, the fourth consecutive monthly decline.
Martin Beck, an adviser to the EY ITEM Club, suggested the return of relative political stability in July via an uncontested Tory leadership contest offered a “good chance” that PMI data will improve. But the robust number masked a less rosy picture that appears when the details are examined.
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The Indian economy grew at 7.9 per cent in the fourth quarter of 2015-16, taking the overall GDP growth to 7.6 per cent for the entire fiscal. Rates of growth moderated in Italy and Spain, whereas France continued to hover around the stagnation mark.
