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Summary: UK economic growth is subdued in first quarter of 2016

06 Apr 2016

The Markit/CIPS PMIs (Purchasing Managers’ Indices) have just been released, showing that Q1 growth is likely to be around 0.4%, down from 0.6% in Q4 2015.

These highly regarded and forward-looking figures have proven a reliable guide to upcoming economic activity. 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

In particular, the UK Services PMI (about 78% of the economic activity) showed that Q1 is likely to be the slowest quarter since the start of 2013. The data also indicated that Q2 is likely to be slower still, and that the rate of job creation was the slowest for two-and-a-half years

Higher labour costs, rent and fuel prices led to the sharpest rise in input prices since 2014, which fed through to the sharpest overall price rises for services output for two years – though inflationary pressures are still relatively benign, meaning that the first interest-rate rise still isn’t likely to happen before 2017

There were no surprises in reasons given for the soft outlook – uncertainty over Brexit, weak and uncertain global demand, potential spending cuts in the upcoming budget, and a softening housing market – notwithstanding the surge in buy-to-let completions before the April deadline

For the actual PMI releases see here:

Services

Manufacturing

Construction

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