‘This is better news for the UK economy, after a very gloomy end to last week. However, we hesitate to get too excited. (Even) if the manufacturing and export upswing seen in H2 2016 does have further to run, these are not the key drivers for the UK economy more widely.’ – Elizabeth Martins, HSBC
British manufacturing activity hit its best since 2014 last month, supported by a solid global economic recovery and the weak Pound. Markit/CIPS reported on Tuesday that its Purchasing Managers’ Index for the British manufacturing sector came in at 57.3 in April, following the preceding month’s 54.2 and surpassing analysts’ expectations for a decline to 54.0. Tuesday’s data is set to provide an additional support to the current British Prime Minister Theresa May ahead of the June 8 National Election. According to the data, British manufacturers enjoyed the recent positive performance of the global economy and the cheaper Sterling, which boosted export growth. However, back in March, the Bank of England Deputy Governor Ben Broadbent said that a rebound in the performance of the UK manufacturing sector might vanish soon and the future performance of the sector would solely depend on the outcome of Brexit negotiations. Moreover, some analysts claim that manufacturers will stop benefiting from the weak currency soon. Nevertheless, Tuesday’s data is set to please the Central bank, which is due to meet next week. After the release, the British Pound hit its seven-month high against the US Dollar but failed to sustain its gains.
