-Rob Dobson, a senior economist at Markit
British manufacturing activity unexpectedly slowed in June, recording its poorest performance in more than two years amid weak demand from Europe. The UK Manufacturing PMI declined to 51.4 in June, down from 51.9 a month earlier, according to Markit Economics. The reading missed the median forecast for a rise to 52.5. While total new order increased, export order dropped for a third month in a row. The report underscored the economy's reliance on domestic demand as the Greek debt crisis looms over the recovery in the Euro zone. Trade was a drag on growth in the beginning of the year, and Markit said this is likely to continue, coupled with the Pound's strength. Manufacturing is also the sector where wages have been rising at the slowest pace. While the weekly earnings in the services sector grew some 2.9% in the quarter to April, manufacturers saw their pay climbing only 1% during the same period, and 0.7% in the previous quarter.
Meanwhile, the BoE Governor Mark Carney said that the risks to the UK's financial stability from the ongoing Greek crisis have intensified since early this year. Carney also highlighted that the Financial Policy Committee and the whole financial system is well prepared for the worst when it come to the Greek crisis. The FPC will continue to monitor closely developments and "remains alert to the possibility that a deepening of the Greek crisis could prompt a broader reassessment of risk in financial markets".
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