UK industry data falls to 2010 low
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UK manufacturing data slumped to a 2010 low in August, refuelling fears of a double dip.
The Chartered Institute of Purchasing and Supply PMI index fell to 54.3 last month from 56.9 in July. This was the lowest index measurement since November 2009.
RBS analyst Ross Walker says the major concern in the data is the collapse in new orders to 52.0 from 58.5, the lowest outturn since June 2009.
Ross says: “The latest PMI survey will add to market jitters about the risks of a double-dip. The slump in new orders is particularly concerning.”
Schroders European Economist Azad Zangana says these results support the view that UK GDP will slow significantly through the second half of 2010.
He says: “The Office of National Statistics recently revised up its estimate of UK GDP growth in the second quarter to 1.2 per cent, however only 0.2 percentage points was actual final demand - 1 percentage point came from the rebuilding of inventories, which usually happens after a severe spell of de-stocking by corporations during a recession.
“The boost from the inventory cycle tends to be very short-lived, and so we expect to see a significant slowdown in the third and fourth quarters.”
The PMI figures led to the pound dropping 0.5 per cent against the Euro to €1.2026, a three week low.
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