Daily Management Review

Economists See No Threat In The Declining Graph Of Britain Manufacturers For December 2017


01/02/2018


Some economists think that the current slag in the performance of British factories would not give way to further decline, while others see the “vitality” of the sector’s recovery pace being lost soon in the coming days.



In the previous month, the growth in the manufacturing sector of Britain slogged after reaching an “our-year highs” in November 2017. However, as per a survey, the sector continues to shine brightly across the firmament of British economy that stepped in the year of 2018.
 
While, the growth is on an accelerating gear in the euro-zone, the “IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index” fell to “56.3 from 58.2” in the month of November 2017. Reuters added:
“That was at the bottom end of forecasts in a Reuterss poll of economists that had pointed to a reading of 58.0”.
 
Even though various sectors like “new business, output, export orders and employment” showed a slower pace of growth in the month of December 2017, PMI maintained its above average status for the year “as a whole”. Scotiabank’s “fixed income strategist”, Alan Clarke, thinks that the poor performance could only be a “temporary setback for the sector” as it contributes to 10% “overall economic output” of the country. In Clark’s words:
“I would only start to worry if we see further declines of this magnitude in the coming months”.
 
However, the survey did not find any change in the price of the “Sterling and British government bond”. The signs overall indicates a prosperous year ahead for the “British manufacturers” at a time when there is a chance of an overall economic slowdown deepened by the approaching departure of Britain from the EU in March 2019.
 
Above all else, the factories in Britain saw a boost of a “resurgent European economy”. As Reuters added:
“Last month, euro zone manufacturers enjoyed their strongest growth since PMI records began more than 20 years ago, easily outpacing their British peers”.
 
Pantheon Macroeconomics’ economist, Samuel Tombs informed that the gap exhibited in the month of December between “British and euro zone manufacturers” marks to be the “widest since June 2008”. He said:
“We expect the recovery in the manufacturing sector to lose its current vitality soon”.
 
Policymakers at BoE have good news as the heat of cost pressure on the British factories “cooled to a four- month low”, as there are those who consider the “consumer price inflation” to be “already around its peak”. However, Reuters reported:
“But the PMI also showed manufacturers added staff at the slowest pace in six months, adding to signs that job creation, a highlight of Britain’s economy in recent years, is now slowing.
“PMIs for the construction industry and the much larger services sector are due on Wednesday and Thursday”.
 
 
References:
reuters.com







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