U.K. manufacturing PMI index rises above expectations in December

The U.K. manufacturing PMI ended 2018 on a high note, coming in against expectations. The manufacturing PMI index rose to 54.2 in December. This is a rise from November’s upwardly revised index of 53.6 in November. The December’s rise is a second consecutive monthly rebound.

The outturn came better than market expectations of a fall and contrasted with more subdued manufacturing readings from China and other European nations for the month, noted Lloyds Bank in a research report. Nevertheless, it is worth noting that most of the rebound in business activity was attributed to manufacturing companies and clients stepping up Brexit preparations, rather than a rebound in underlying conditions.

Markit stated that most of the rebound in new orders was because of clients stock-piling in response to Brexit-related supply-chain uncertainties. These worries were also seen in manufacturing companies’ own reaction, where the likelihood of raw material shortages led companies to hoard stocks of key factor inputs, while also increasing their stocks of finished goods – possibly to give a buffer against any sharp rise in client demand for stockbuilding in the months ahead.

“The ongoing impact of Brexit-related uncertainty continued to weigh on firms’ confidence over the future outlook, with the overall degree of long-term optimism in the UK manufacturing sector in December remaining close to November’s 27-month low”, added Lloyds Bank.

At 11:00 GMT the FxWirePro's Hourly Strength Index of British Pound was slightly bullish at 52.6951, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 37.6591. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex