Data released today showed that Eurozone Manufacturing PMI (Purchasing Managers Index) was at its lowest level for three years. There wasn’t good news for the UK economy either which experienced a setback following its rebound of the past few months.
According to CIPS/Markit PMI figures activity in the UK manufacturing sector shrank by more-than-forecast in September. The survey compiler stated that all sectors recorded contraction and that manufacturers had cut production for the third consecutive month.
Manufacturing sector PMI dropped from Augusts’ upwardly revised figure of 49.6 to 48.4 in September, widening the gap between growth and contraction.
In September new export orders declined for the sixth consecutive month, with manufacturers particularly noting a decrease in European and Asian demand. Companies were left hardly able to increase their own prices, and the index for prices charged consequently fell to its lowest level for eight months. There was also a surge in the costs faced by British manufacturers, including hiked prices for fuel, food, metals, chemicals and oil.
This indication of continuing weakness in manufacturing highlights the fragility of British economic recovery and will no doubt put more pressure on the Bank of England to extend its quantitative easing programme beyond the completion of the current round in November.
Chief economist with Markit, Chris Williamson, was quoted as saying: ‘Overseas sales continue to be hit by the ongoing deterioration in global economic growth with the Eurozone, the UK’s largest export market – at the epicentre of the weakness. In this global economic environment, manufacturers look certain to struggle and the sector is unlikely to act as driver of economic growth.’
The Pound to Euro exchange rate is currently trading at 1.2519
The Pound to US Dollar exchange rate is currently trading at 1.6145
The Pound to Australian Dollar exchange rate is currently trading at 1.5569
The Euro to US Dollar exchange rate is currently trading at 1.2897
The Euro to Pound exchange rate is currently trading at 0.7986
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