May was the fourth month in a row that growth in the UK manufacturing sector decreased. If manufacturing growth continues to slow, it won’t be long before we are in contraction.
Today’s PMI data showed the weakest monthly growth since December 2009. No one expected the data to be good, as forecasts were generally pessimistic - but the results are even more alarming for the UK’s economic outlook.
Sterling has taken a major hit in response - dropping by almost a cent against the US dollar, and by half a cent against the euro. All this does is place further doubts over the strength of the UK’s economic recovery, pushing back expectations of a long-awaited Bank of England rate rise. Some players bet on a rate rise at the end of this year, but as things stand we are likely to have to wait until the end of the first quarter of 2012.
With the rate of growth in the construction and services sectors expected to be flat this week, we may have to wait even longer for some positive data. Today’s data doesn’t bode well for UK growth in the second quarter - we are in dire need of an upside surprise from the services sector.
