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UK economic snapshot

03 Mar 2016

The forward-looking and well-regarded Markit/CIPS PMI (Purchasing Managers' Indices) have just been released, collectively showing a disappointing outlook for economic activity. The figures indicate that GDP growth for the first quarter could decline to about of 0.3%, down from 0.6% in the fourth quarter of 2015.

The services PMI dropped to 52.7 from 55.6, a level that historically has indicated a stagnating, or even shrinking of the UK economy. Services account for around 78% of UK GDP, and is the main engine of the UK economy.

Companies have quoted concerns over slower economic growth at home and abroad, plus the uncertainty surrounding the increased risk of ‘Brexit’

Output growth in construction (7% of GDP) and manufacturing (13% of GDP) hit ten and seven-month lows respectively, with construction being hit by softer residential house-building, and manufacturing by lower exports – despite sterling being lower due to ‘Brexit’ fears (lower sterling means British goods are cheaper for foreigners)

Input costs were benign across the board, meaning inflation is subdued. Given the weakness both at home and abroad, a UK interest-rate rise is now not likely until 2017

The PMI data from Markit/CIPS are highly regarded as reliable forward-looking data. The data is compiled from responses from companies' Purchasing Managers, and are based on hard facts, not opinion, on what is happening at 'grass roots' level in the economy

For the actual releases click here:

Services

Manufacturing

Construction

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