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Why UK Manufacturing PMI Is Gradually Falling

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UK Manufacturing PMI in January

The UK Manufacturing PMI showed a weaker rise in January 2018. It was 55.3 in January 2018 compared to 56.3 in December 2017. However, it didn’t beat the preliminary market expectation of 56.5. It was the weakest expansion in manufacturing activity since June 2017.

The UK Manufacturing PMI in January was mainly due to the following:

  • Production output and volume slowed down in January 2018 compared to the previous month.
  • New orders improved the least in the past seven months.
  • Employment in the manufacturing sector rose at a faster pace; export orders rose at a higher rate.

Uncertainty about the Brexit negotiation is rising and hampering the overall investment sentiment in the United Kingdom. However, the inflation figure for the United Kingdom is improving gradually, which is helping the Bank of England take a hawkish stance.

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Performance of the index and ETF

The iShares MSCI United Kingdom ETF (EWU), which tracks the performance of the United Kingdom, rose 3.7% in January 2018. However, the FTSE 100 Index (UKX-INDEX) fell 1% that same month.

In the next part of this series, we’ll analyze the indicators that investors should watch next week.

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