UK PMI flash for July

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Reuters


Britain has just received its first concrete sign that Britain’s exit from the European Union, or Brexit, will crush the national economy after a grim set of PMI data released by Markit on Friday morning showed a ‘dramatic deterioration’ economy since the UK voted to leave the EU.

Markit’s PMI flash readings for the UK economy showed composite output fell to its lowest level since March 2009 when the global financial crisis ended.

Here is the scoreboard:

  • Services PMI — 47.4, compared to 52.3 in June and at an 87-month low. The figure was well below the forecast of 49.2.
  • Manufacturing PMI — 49.1, a 44-month low, and well below the expected 50 reading.
  • Compound PMI — 47.7, down from 52.4 in June, and an 87-month low.

The PMI, or Purchasing Managers Index, Markit figures are given as a number between 0 and 100.

Anything above 50 indicates growth, while anything below signifies contraction in activity – so the higher the better.

The numbers are a flash read, meaning they could easily be revised up or down when the final readings arrive at the end of the month.

Speaking about the data, Markit Chief Economist Chris Williamson said (emphasis ours):

July saw a dramatic deterioration in the economy, with business activity collapsing at the fastest rate since the height of the global financial crisis in early 2009.

“The slowdown, whether manifested by cancellations of order books, a lack of new orders or the postponement or halting of projects, has most often been attributed in one way or another to ‘Brexit ‘”.

And here’s Markit’s terrifying chart, showing just how massive post-Brexit Britain’s contraction has been so far:

UK pm July


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Unsurprisingly, the data hasn’t been welcomed by economists, with Samuel Tombs of Pantheon Macroeconomics saying in an emailed note (emphasis ours):

The collapse of the composite PMI to its lowest level since April 2009 provides the first major evidence that the UK is entering a sharp decline. If the PMI stays at the July level in August and September, it will be consistent with past shape with a 0.4% drop in QoQ GDP in the third quarter. The confidence shock from the furlough vote may fade in the coming months, but the drop in the new orders index to just 46.2 from June’s 53.0 points to even faster declines of future production.”

Earlier on Friday, data from Markit showed the eurozone economy was showing ‘surprising resilience’ to the Brexit vote, with PMIs falling a bit in June but beating expectations of economists polled ahead of the release. .

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