Surveys paint mixed picture for UK economy.
market information

08 January 2016

Surveys paint mixed picture for UK economy.

By PRW.
 The near-term outlook for UK manufacturing “remains poor”, according to the CBI New data has indicated that while the UK’s private sector ended last year on a high, the country’s manufacturing continued to struggle.

As the Markit/CIPS PMI suggested that growth in UK manufacturing slowed at the end of last year, the latest growth indicator from employers’ organisation the CBI showed the balance of firms reporting a rise in output rose from November’s 28-month low of +13% to a three-month high of +20% in December.
Expansion in business and professional services was the main contributor to growth, according to the CBI, as well as output in consumer and distribution services. But despite export orders improving, manufacturing firms reported a slight fall in output in the three months to December, and the near-term outlook “remains poor”, according to the CBI, with companies anticipating another small decline in the coming quarter.
The CBI said that while the domestic economy remained firm, net trade was still expected to drag on growth, “as the impact of strong sterling and a softer global growth outlook bears down on the UK’s exports, as evidenced by the sluggish performance of the manufacturing sector in recent surveys. Indeed, the main risks to the UK’s outlook remain global. “While the UK’s direct exposure to China is limited, the impact on global growth from a further slowdown in the world’s second-largest economy could bear down on UK trade even more than we expect,” it added. Data from Markit suggested that the end of 2015 saw the rate of growth in the UK manufacturing sector slow further from the recent peak reached in October.
Meanwhile news from China reminded domestic economists that issues still remained in that part of the world. Trading on the country’s stock markets was suspended after dramatic falls in the value of shares triggered a new system, designed to curb stock volatility, which closed them down.
And back in the UK a survey from consultants Deloittes found that confidence among domestic finance directors had fallen. Ian Stewart, Deloittes’ chief economist, said: “UK finance chiefs are downbeat about the outlook for growth in the euro area in 2016 despite a stronger than expected acceleration in activity seen in the region in 2015. Indeed, they are more pessimistic about prospects for the euro area this year than for emerging market economies. Sentiment is most positive on the US and the UK economies. Nonetheless, doubts about the pace and sustainability of the global recovery are weighing on business sentiment.”
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