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Economy in Brief

UK MFG Staves Off Further Declines
by Robert Brusca   November 01, 2010

The UK MFG sector showed a bit of spunk as the index for October rose, ending a string of declining values and surprising market forecasters. The UK index for October is back above not just its September value but its August value as well. Combined with the news on GDP from last week, the UK economy is suddenly showing some muscle. Will it last?

Data from Hometrack on home prices was not as encouraging as prices fell the most since January. Hometrack found that home prices fell by 0.9% from the previous month and posted their fourth straight decline. Buyer demand reportedly fell by 2.0% in the month while the number of homeowners putting their properties on the market increased by 1.9%. With the holidays in train Hometrack warned that conditions probably would get worse before they get better.

The UK still is facing further pressure from the ongoing fiscal austerity. The impact of the fiscal contraction will be ongoing. As such bright spots in the data, like the MFG survey, hardly seem to be indicative of what is to come. The fiscal drag could put the BOE back in the picture with renewed stimulus efforts.

MFG, Construction and Services  PMI CIPS/NTC
  Monthly Readings Change Over: Percentile
  Oct-10 Sep-10 Aug-10 3MO 6MO 12MO Of range
MFG 54.93 53.52 54.06 -3.86 -3.82 3.02 80.5
Construction #N/A 53.79 52.08 -4.61 0.72 7.08 70.2
Services* #N/A 52.80 51.33 -1.60 -3.66 -2.50 62.1
MFG range since January 1992;  Construcion Since April 1997 Services Since July 1995
* Services & construction changes and ranking: Sep-10 which is the most current date.
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