UK’s April headline manufacturing PMI fell to the weakest level since February 2013. The index dropped from March’s figure of 50.7 to 49.2 in April. This is in line with the contracting output, noted Nordea Bank. PMI figure lower than 52 are usually coupled with falling manufacturing output, according to Nordea Bank. Consensus projection was for a slight rise to 51.2 in April.
According to Markit’s press release “the headline index was dragged lower by lacklustre trends in production and new orders and declines in both employment and stocks of purchases”.
Services PMI figure, which will be released on Thursday, will be more vital as a sign of how the UK economy has begun the second quarter. The services sector continues to be the main growth driver of the economy in spite of the recent weakness. The services PMI for March is likely to decline a bit from 53.7 in March, said Nordea Bank. But a huge decline might start concerning policymakers. If UK stays in the EU, growth is likely to catch up in Q2 2016.
“Although today's surprisingly weak manufacturing survey adds to the downside risks for the UK economic outlook, we still project real GDP growth to reach 2% in both 2016 and 2017 after an expansion of 2.3% in 2015”, said Nordea Bank.
