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Industrial Activity Hits Nine-Month Low

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Anyone posted this yet?

http://www.guardian.co.uk/business/2010/sep/01/industrial-activity-hits-nine-month-low

Industrial activity hits nine-month low

The manufacturing figures provide further evidence that the British economy is losing steam after surprisingly strong growth in the second quarter

New orders booked by British manufacturers slowed sharply last month, pushing industrial activity to a nine-month low.

The Markit/Chartered Institute of Purchasing and Supply monthly manufacturing index dropped to 54.3 in August from a downwardly revised 56.9 in July. This was the lowest level since last November, although it remained above the 50-mark which separates growth from contraction.

A sub-index measuring new orders plunged to 52, the lowest since June 2009, from 58.5 in July. It was the biggest one-month fall in more than six years.

"The expected slowdown in the UK manufacturing recovery from its highs earlier in 2010 is underway," said Rob Dobson, senior economist at Markit Economics. "Taken alongside the eurozone figures published today, it looks as if a broad industrial slowdown is occurring across much of the EU."

The equivalent manufacturing survey for the eurozone hit a six-month low in August. In the US, the Institute for Supply Management releases its August manufacturing index at 3pm London time.

The figures provide further evidence that the British economy is losing steam after surprisingly strong growth in the second quarter. It grew by 1.2% between April and June, the fastest pace in nearly a decade, thanks to a pick-up in the construction industry, companies rebuilding their stock levels and strong household spending.

"There is further support here for the view that the rapid growth in the economy seen in the second quarter – to which industry made a strong contribution – will not be sustained in the coming quarters," said Jonathan Loynes, chief European economist at Capital Economics.

Alan Clarke at BNP Paribas concurred. "The services side of the economy is likely to be equally disappointing. Overall, these surveys are reinforcing the case that the strength of second-quarter GDP was a blip. We will be lucky to see half that pace of growth during the third quarter (more likely 0.4% in our view) and the pace of growth looks likely to grind to a halt around the turn of the year."

On the other side of the Atlantic, growth has already slowed sharply. US Federal Reserve officials were divided at their last meeting over whether they should resume purchases of Treasury bonds to stimulate the economy and what impact the move could have, according to minutes released last night. The Fed's policymaking committee decided to reinvest money from maturing mortgage securities in government bonds by a nine-to-one vote, but this masked wider disagreement between committee members.

On Friday, the Fed's chairman Ben Bernanke said he stood ready to prop up the fragile economic recovery if needed as he conceded growth had been weaker than the central bank had expected.

The word "unexpected" is not used. However, the words "expected slowdown" do appear in the story. Is this significant? Has it finally sunk in that the economy is not going to rebound, bounce back, roar ahead and all the other positive things it was supposed to, according to some?

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The only people that said we would have stong above trend growth was Darling in his budget forecast.

The sensible people now running the economy said growth would be lower than Darling had forecast at the time they took over and then after the emergency budget there was another lowering of the growth forecasts.

Do not forget any number above 50 means that the sector being reported on (Manufacturing in this case) is growing in absolute terms.

Edit: And your title is misleading. Are you saying that economic production is lower now than 9 months ago?

Edited by ralphmalph

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The only people that said we would have strong above trend growth was Darling in his budget forecast.

The sensible people now running the economy said growth would be lower than Darling had forecast at the time they took over and then after the emergency budget there was another lowering of the growth forecasts.

Edit: And your title is misleading. Are you saying that economic production is lower now than 9 months ago?

It's not my title, it's the Grauniad's. The story goes on to say:

"The Markit/Chartered Institute of Purchasing and Supply monthly manufacturing index dropped to 54.3 in August from a downwardly revised 56.9 in July. This was the lowest level since last November, although it remained above the 50-mark which separates growth from contraction."

The actual document from Markit http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=6941 says:

"August PMI data signalled a further slowdown in the rate of expansion of the UK manufacturing sector. The seasonally adjusted Markit/CIPS UK Manufacturing PMI™ – which is calculated from data on new orders, production, employment, supplier performance and stocks of purchases – fell to 54.3, from 56.9 in July, its lowest level since last November."

Also, Darling's forecast for growth for 2011 was 3.25%, whereas the OBR's forecast in June was 2.6%. The latter is lower (well, 0.65% lower), but looks rather optimistic.

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It's not my title, it's the Grauniad's. The story goes on to say:

"The Markit/Chartered Institute of Purchasing and Supply monthly manufacturing index dropped to 54.3 in August from a downwardly revised 56.9 in July. This was the lowest level since last November, although it remained above the 50-mark which separates growth from contraction."

The actual document from Markit http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=6941 says:

"August PMI data signalled a further slowdown in the rate of expansion of the UK manufacturing sector. The seasonally adjusted Markit/CIPS UK Manufacturing PMI™ – which is calculated from data on new orders, production, employment, supplier performance and stocks of purchases – fell to 54.3, from 56.9 in July, its lowest level since last November."

Also, Darling's forecast for growth for 2011 was 3.25%, whereas the OBR's forecast in June was 2.6%. The latter is lower (well, 0.65% lower), but looks rather optimistic.

So the Guardian Title Should be "Growth in Industrial Activity hits 9 month low."

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  • 142 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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