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James Smith, developed markets economist at ING, explains that at 48.3, the latest Markit/CIPS UK manufacturing PMI is far from cheery.

Key Quotes

“Admittedly this is a little better than expected – and this comes amid some, albeit limited, evidence that firms are rebuilding stocks of inputs ahead of the October 31 Brexit deadline.”

“While we suspect the recent negativity in the manufacturing data has been to some extent exaggerated by the post-March 31 correction in production, output is also unlikely to meaningfully rebound in the near-term. Alongside all the Brexit uncertainty, the global growth story is also weighing on demand, particularly from the eurozone.”

“Despite reasonably resilient consumer activity over recent months, investment is falling and this will, in turn, likely reduce demand for associated service-sector activities (professional, finance etc). Putting this together, the underlying pace of UK growth is still likely positive, albeit pretty lacklustre.”

“While we are sceptical the Bank of England will follow the Fed and the ECB towards policy easing right now, all of this emphasises that any prospect of policy tightening is a long way off.”