Wednesday, November 4, 2015

UK data hindered by the pound? - ING

FXStreet (Guatemala) - Analyst at ING, James Knightly, explained that yesterday’s surprise jump in the manufacturing PMI is at odds with other survey evidence suggesting sterling strength and weak external demand is holding back the sector.

Key Quotes:

"Yesterday’s release of the manufacturing purchasing managers’ index for October showed the headline index rising to 55.5 from an upwardly revised 51.8 figure in September. This is well ahead of the 51.3 consensus estimate and is very impressive given the strength of sterling and external growth worries – note last week’s CBI industrial trends report suggested the sector was really struggling with business optimism plunging. It also appears somewhat odd given the relative weakness in the US, Chinese and Eurozone PMI releases yesterday – how come the UK bucked the trend?"

"Although question marks have to be raised over the outcome of this survey, for now we have to take it at face value – the PMI reading is the strongest for 16 months and was fuelled by a jump in new orders to 56.9. This bodes well for output and employment in the sector and suggests that 4Q GDP growth should improve on the rather disappointing 0.5% QoQ figure for 3Q15. It also backs up recent positive comments from Bank of England officials and suggests at the very least one further MPC member (most likely Martin Weale) will join Ian McCafferty in voting for an interest rate rise on Thursday."
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