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Economy in Brief

UK MFG Takes Unexpected Dive
by Robert Brusca  May 3, 2011

The UK MFG index fell unexpectedly in April. The index is on a seven month low. It is still 'strong' sitting at the 81st percentile of its high-low range. The construction and services indices lag and are not yet in for April. The other indices are all about at the approximate same relative point in their respective ranges with construction in March in its 77th percentile and services also in March in the 83rd percentile.

MFG has been a consistent bright spot in the UK economy. But in April that bright light faded. The MFG index is down for three-months running. It is no longer clear that the MFG is in an uptrend. The distributive trade index for sales for this time of year plunged to -12 in April from +9 in March. Retailing is under a great deal of pressure.

The UK is struggling under surging inflation and an ongoing austerity plan that includes a hike in the VAT. The MFG sector had been the backbone of an economy that was standing up in the face of these pressures. Housing also has had some staying power. But the MFG sector was a huge prop that now is at risk.

In response to the poor MFG report the pound fell on foreign exchange markets. Growth pessimism is on the rise.

MFG, Construction and Services PMI CIPS/NTC
  Monthly Readings Change Over  
  Apr-11 Mar-11 Feb-11 3Mo 6Mo 12Mo %-ile
of Range
MFG 54.58 56.73 60.76 -1.88 3.08 -0.80 81.4
Construction N/A 56.41 56.46 7.36 2.62 3.34 77.3
Services* N/A 57.11 52.60 7.40 4.31 0.65 83.2
MFG range since January 1992;  Construction Since April 1997 Services Since July 1995
*Services & construction changes and ranking: Mar-11 which is the most current date.
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