UK’s Manufacturing PMI Rose Sharply: Is It a Turning Point?

The UK’s manufacturing PMI stood at 56.9 in August 2017 as compared to 55.3 in the previous month. The PMI figure was far above the preliminary market expectation of 55.

The stronger UK manufacturing PMI in August was mainly due to the following factors:

• Production output and volume improved at a stronger rate in August 2017.
• New orders and export orders all expanded at a faster pace during the month.
• Job creation in the manufacturing sector improved during the month.

The improvement in the UK’s (EWU) manufacturing PMI indicates that domestic demand picked up. Business conditions also rose at a faster pace in August as compared to July 2017. The improving macroeconomic environment is slowly minimizing concerns resulting from the Brexit vote.

Consumer spending is also gradually improving and the Eurozone economy (VGK) (IEV) is in a better condition than it was earlier. The improving economic scenario is good for market movement.

The iShares MSCI United Kingdom ETF (EWU), which tracks the performance of the United Kingdom, fell nearly 0.8% in August 2017. The UK’s FTSE 100 Index rose nearly 0.8% in August 2017.

In the next part of this series, we’ll analyze US 2Q17 GDP.