- Kallum Pickering, Berenberg's UK chief economist
Britain's manufacturing growth decline to near a three-year low in February due to a drop in new orders, underscoring the fragility of the UK economy. Markit factory index declined to 50.8 last month, down from 52.9 in January, marking the lowest level since April 2013. UK manufacturing has been under pressure for months already, hit hard by a slowdown in demand from major overseas economies. The manufacturing sector cut jobs for a second consecutive month, though the decline was moderate. On top of that, companies reported that they reduced prices for goods for the sixth straight month, but the decline was slightly less sharp than in January.
Moreover, recent data from the Office for National Statistics showed that the manufacturing sector dragged on Britain's economic growth during the final quarter of 2015, with the economy reliant on the service sector and consumer spending. The total UK gross domestic product grew 0.5% in the December quarter, with the services sector and domestic consumption being the only two drivers supporting the economy. Markets will now await fresh PMI data on the services sector due on Thursday. Expectations ahead suggest activity slowed slightly in February.
© Dukascopy Bank SA