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At 54.0, the latest UK manufacturing PMI is the lowest in three months and is a far cry from the levels seen towards the end of 2017, explains James Smith, Developed Markets Economist at ING.

Key Quotes

“Weaker domestic demand saw new orders fall and the rate of output growth slip to the lowest in 16 months.”

“Interestingly though, demand from abroad hit a six-month high, implying that firms are still reaping the rewards of better global growth, despite the recent moderation in Europe.”

“But over coming months, life for manufacturers is unlikely to get any easier. The recent escalation in trade tensions is clearly a challenge, but increasingly  the biggest headache for businesses is likely to be the threat of a ‘no deal’ Brexit. This scenario would likely see huge congestion at ports and disruption to supply chains.”

“Today’s slip in the PMI is unlikely to faze Bank of England policymakers ahead of tomorrow’s decision. Representing around 10% of output, manufacturing is a relatively small part of the UK growth mix.”

“After  Thursday, we currently don’t anticipate another hike before May 2019.”