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UK braces for further manufacturing slowdown

business-articlesUK braces for further manufacturing slowdown
  • UK manufacturing growth set to slow
  • Eurozone unemployment likely to fall
  • USD may slide on factory PMI
UK manufacturing PMI may drag on GBP

The UK is set to receive its latest update on the state of the manufacturing sector this morning and markets are bracing for a further decline in activity.

Economists forecast that today’s reading will show that the factory index slid from 55.3 to 55 in February, likely leading to a drop in the Pound.

Analysts suggest that weak output growth and rising input costs are likely to be the main contributing factors for the dip.

While a reading of 55 would signal that the sector still saw some growth last month, another month of slowing activity is likely to heighten concerns over the UK’s economic growth in the first quarter of 2018.

EUR likely to rise as unemployment falls

The Eurozone’s recent run of impressive employment looks set to continue this morning as the bloc publishes its latest labour statistics.

Analysts are optimistic that after holding at 8.7% in December an uptick in demand for labour in the New Year will have prompted the unemployment rate to slide to 8.6% in January.

Should figures fall as expected this would see the Eurozone enjoy its lowest levels of unemployment since the financial crisis.

The Eurozone’s robust economic performance has driven a considerable pick up in employment over the last twelve months, with the jobless rate having fallen nearly 1% in the span of a year.

US factory activity also expected to slow

The US will publish its own manufacturing PMI figures for February later today, with the US dollar possibly drifting lower with any cooling in activity.

Forecasts suggest that ISM will report that the slowdown in the US factory sector accelerated last month, with the latest US factory index expected to have fallen from 59.1 to 58.6.

However with the headline reading still suggesting that the nation’s manufacturing sector expanded at a healthy clip, investors will be looking closely at the details of the data release to see how various subsectors fared in February.

Of particular note is likely to be the employment figures, which may be used as an early indicator of how non-farm payrolls may shape up next week.

Upcoming Data

Thursday, 1 March, 2018
09:30                       GBP Manufacturing PMI
10:00                       EUR Eurozone Unemployment
15:00                       USD ISM Manufacturing PMI
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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