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James Smith, developed markets economist at ING, points out that the UK’s February Markit/CIPs purchasing managers’ index (PMI) with a reading of 51.3 is a little better than hoped and means the sector has avoided slipping into contraction territory.

Key Quotes

“The accompanying press release makes for fairly grim reading, and adds to the picture of an economy being held at a virtual standstill, as consumers and businesses put-off big decisions ahead of 29 March.”

“Probably the most alarming detail – if perhaps not the most surprising – is that employment numbers are slipping at their fastest rate in seven years as firms put the brakes on hiring ahead of Brexit.”

“There is some evidence of this in the latest British Retail Consortium sales figures, and we suspect at the very least, households may opt against making some big-ticket purchases over the next few weeks, and instead choose to maintain savings levels.”

“The bottom line is that growth will continue to stall over coming weeks, particularly as we may not get complete certainty on the possible Article 50 extension until a little over a week before the 29 March deadline.”