UK PMI manufacturing dropped to 54.0 in July, down from 54.3 and missed expectation of 54.2. Markit noted weaker increases in both output and new orders. Also, intermediate goods production falls for first time in two years.
Rob Dobson, Director at IHS Markit, which compiles the survey:
“UK manufacturing started the third quarter on a softer footing, with rates of expansion in output and new orders losing steam. The upturn in the sector has eased noticeably since the back-end of 2017, meaning that manufacturing has failed to provide any meaningful boost to headline GDP growth through the year-so-far.
“The July survey data also shows that the performance of the sector is becoming more uneven, with solid output growth in the investment goods industry being largely offset by intermediate goods production contracting for the first time in two years. As the intermediate goods sector supplies other manufacturers, taken alongside weaker growth of total new orders and a drop in business confidence to a 21-month low, this all suggests industry is unlikely to exit this soft patch in the near future.
“The prices picture remained mixed in July. Cost inflation eased, whereas selling prices rose at the quickest pace in five months. The financial markets still seem to have an interest rate increase nailed on for August. However, if the combination of weaker growth and a softening of pipeline cost pressures at manufacturers is mirrored in the larger service sector, the Bank of England’s decision will be far from unanimous and they may even yet find some cause for pause.”
