U.K. Manufacturing Growth in December slowed more than anticipated


According to research group IHS Markit, Purchasing Managers Index (PMI) for the industry dropped to 56.3 in December from 58.2 in November, which was the highest level in four years. The index in December was below the median estimate of economists for a reading of 57.9. However, the sector remained positive in Britain’s economy.

“Expansion remained comfortably above long-term trend rates,” said Rob Dobson, the director of IHS Markit. “The sector has therefore broadly maintained its solid boost to broader economic expansion in the fourth quarter. The outlook is also reasonably bright.”

For the index, a reading above 50.0 indicates industry expansion, and below 50 indicates contraction. The reading in December means that activity in the U.K. manufacturing sector decreased slightly in December, but continued to expand at a solid pace, according to a survey data on Tuesday.

According to a fixed income strategist, the figures in December may represent only a temporary lag for the sector, which consists of 10% of the overall economic output.

At the same time that PMI in Britain dropped, euro zone manufacturers enjoyed their strongest growth since PMI records began, which was more than 20 years ago.

“We expect the recovery in the manufacturing sector to lose its current vitality soon,” said Samuel Tombs, an economist with consultancy Pantheon Macroeconomics. He also said that the gap between euro zone and British manufacturers in December was the widest since June 2008.

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