U.K. manufacturing sector growth continues to be robust in December

The growth of U.K. manufacturing sector continues to be robust at the end of 2017. The U.K. manufacturing PMI for the month of December dropped from 58.2 to 56.3, reversing the robust rise of November and bringing the headline index to October’s level; however, the level continues to be much above the 50 level that separates contraction and expansion.

While the outturn disappointed and contrasted with the stronger tone captured by the December CBI Industrial Trends survey, the average for the quarter, which is at 57, continues to be above that of the third quarter. This implies some rebound in the nation’s manufacturing activity over the quarter, noted Lloyds Bank in a research report. A simple mapping to the official data might be in line with quarterly manufacturing output growth in excess of 1 percent.

Looking into the details of the report, the overall drop in the headline figure was driven from a fall in the rate of current output and new orders. Still, with the flow of new orders continuing to come through at a sound rate and backlogs of work rising for a second straight month, companies recorded an improvement in prospects for future activity. Accordingly, manufacturing companies continued to hire more workers, although at a slower rate than in November.

In spite of today’s reading, as the manufacturing sector accounts for just about 10 percent of the U.K. economic activity, the nation’s growth outlook would still be mainly driven by the dominant services sector, stated Lloyds Bank. The Services PMI, which is set to be released on Thursday, is expected to have risen slightly in December after the November dip.

At 13:00 GMT the FxWirePro's Hourly Strength Index of Euro was slightly bullish at 63.8518, while the FxWirePro's Hourly Strength Index of US Dollar was highly bearish at -140.413. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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