U.K. manufacturing PMI falls to 17-month low in April

The U.K. manufacturing PMI resumed its fall in April, dropping to a 17-month low of 53.9 from March’s unchanged reading of 54.9. The headline PMI index moved further away from November’s four-year high. Significantly, the headline index continues to be above the 50 level, which separates contraction and expansion; however, it is hinting at a more modest rate of growth in manufacturing than that seen last year. Especially, April’s reading is below the average of 55.9 seen in 2017, a year in which manufacturing output rose 2.5 percent.

Delving into details beneath the headline measure, there seems to be moderations in the rate of current activity and employment, along with a reduction in stock purchases, which accounted for most of the drag on manufacturing sentiment last month. Alongside, the fall in the headline PMI, expectations around future activity also fell last month. The future output index dropped to 73.4 from 74.8 and reversing much of the improvement seen in the early parts of the year.

While the sentiment was expected to moderate – and a 53.9 print still implies that manufacturing sentiment continues to hold up – the pullback was slightly stronger than expected and some of the weakness in the underlying components warrants caution, noted Lloyds Bank in a research report.

“However, with the broader economy expected to show a recovery in the second quarter (following a largely weather-impacted Q1), greater focus will be on the construction (Wednesday) and services (Thursday) PMIs due later this week”, added Lloyds Bank.

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