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UK: Manufacturing PMI prints 54.2 in December - ING

James Smith, developed markets economist at ING, points out that the UK manufacturing saw a modest improvement as the manufacturing PMI printed 54.2 in December.

Key Quotes

“There are a couple of reasons why we struggle to see this increased activity boosting growth in the short-term. Firstly, it’s worth remembering that the manufacturing sector makes up a relatively limited share of economic output – around 10% of GDP. More importantly, warehousing is in relatively short supply, leaving firms with fairly limited scope to boost inventories. Research by Savills last year found the vacancy rate for warehousing in London sits at just 3%.”

“With that in mind, we think the economy will struggle to regain momentum over the winter. We expect growth to slow to around 0.2/0.3% in both the fourth quarter of last year, and the first quarter of 2019.”

 

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