- Rob Dobson, senior economist at Markit
Britain's manufacturing sector expanded at the slowest pace in a year in July amid fears that geopolitical tensions between Russia and the West may start to have an adverse impact on manufacturing exports. Slowing increase of manufacturing output, orders and job creation caused the Markit/CIPS PMI headline index to fall towards 55.4 down from 57.2 a month earlier, hitting the lowest point since July 2013 and against economists' expectations for 57.2. Growth, however, remained buoyant by historical standards driven by elevated business confidence, as well as slightly easier credit conditions, and the slowdown was in line with the Bank of England's view that U.K.'s economic performance will weaken in coming months. Markit said growth in new export orders slowed to a four-month low and backlogs of work declined at the fastest pace since May 2013 with some companies saying they had excess capacity. Moreover, employment in manufacturing rose in July at its slowest pace since October last year.
The Sterling fell to the lowest level in seven weeks against the Greenback after the data release, which some investors saw as weighing against an early interest rate hike by the nation's central bank. The International Monetary Fund said earlier this week that the Pound was overvalued by as much as 5-10%.
© Dukascopy Bank SA