THE manufacturing sector has slumped to a three-and-a-half year low as Brexit anxieties grip companies and weaker demand stymies exports.
Advertisement
The EY Item Club’s latest report on the financial services sector predicted a fall of 1% in business lending over the course of the remaining months of this year, increasing to a 1.8% shrinkage during 2017.
Markit said its Purchasing Managers Index plunged to 47.4 in July from 52.3 in June, below the 50 level that signals contraction.
The Bank’s Monetary Policy Committee is widely expected to slash interest rates this week from 0.5% and embark on more quantitative easing after a string of economic surveys showed a marked slowdown in the United Kingdom economy since the Brexit vote.
The cut in prices showed that the inflationary pressure was muted, while job creation continues to remain subdued, leaving room for a parting gift from the outgoing RBI Governor in form of a reduction in interest rates to boost growth.
An index reading of above 50 indicates an overall increase, while below 50 an overall decrease.
Construction was not included in the original flash estimate of economic conditions in the aftermath of Brexit, but the all-sector PMI fell from 51.9 in June to 47.3 in July, its lowest level since the economy was in recession in April 2009.
Clients of construction companies had adopted a “wait-and-see” approach to projects, rather than cancelling them outright or reducing their scope, the survey showed, with firms cutting staffing at the fastest rate since November 2012.
All eyes will now be on the all important interest rate decision from the Bank of England, which will be announced tomorrow, the bank’s Monetary Policy Committee begins its two day policy meeting today, after surprisingly voting 8-1 in favour of retaining interest rates at 0.5% three weeks ago.
“Although output expanded at the fastest rate since March and backlog accumulation intensified, businesses refrained from creating jobs”, said Pollyanna De Lima, Economist, Markit and author of the report.
Dobson added the numbers make a case for “swift policy action” in the hope of “restoring confidence”. Purchase price inflation surged to a five-year high in July, reflecting a sterling-induced rise in import costs and higher metal and commodity prices.
Advertisement
According to the NBS, the Steel Industry PMI is a composite index that is weighted in the following order: new orders (30%), output (25%), employment (20%), supplier delivery times (15%) and inventories (10%).
