German manufacturing activity grows steadily in July: PMI

Manufacturing also contracted in the United Kingdom, falling to its lowest level in three years after the Brexit vote. The official China PMI for July was 49.9, down from 50.1 previously and a little below expectations, but the non-manufacturing index rose to a 53.9 from 53.7.

The latest UK Purchasing Managers’ Index, compiled by Markit, will give the Bank of England more impetus to cut interest rates after it surprised markets by holding fire in July but said most policymakers were leaning towards stimulus in August.

Manufacturing activity picked up marginally, rising to a four-month high in July, according to a survey.

Here in the U.S., mixed data has diminished expectations heading into the second half of the year.

“The weak numbers provide powerful arguments for swift policy action”, said Rob Dobson, an economist at Markit.

He said: ‘The pace of contraction was the fastest since early-2013 amid increasingly widespread reports that business activity has been adversely affected by the European Union referendum.

This was the first growth in activities since February 2015, with sub-indexes of output, new orders and inventory all surging past the 50-point mark that separates growth from decline.

He added: “The weakening order book trend and upswing in cost inflation point to further near-term pain for manufacturers”.

There was some reprieve for the manufacturing industry as the slump in the value of the pound continued to help United Kingdom exports.

ISM®’s New Orders Index registered 56.9 percent in July, which is a decrease of 0.1 percentage point when compared to the 57 percent reported for June, indicating growth in new orders for the seventh consecutive month.

Moreover, sluggish market demand indicated by the declining fixed-asset investment growth rate in the first half of the year, especially in the private sector, and the reduction of excessive production capacity in some traditional industries have combined to contribute to the contraction in the manufacturing industry.

“Brexit amounts to a storm that has clouded the economic waters”, Federal Reserve Bank of Atlanta President Dennis Lockhart said in a mid-July speech.

Oil prices dipped sharply lower with a slide to fresh three-month lows and a test of the key $40.00 level in WTI, which pulled the FTSE index lower. New orders and production are still really strong and led into the backlog or orders down 4.5 percent to 48.0, which is not a bad thing, as that is what the backlog is for. Nonresidential fixed investment, on things like factories and machinery, fell for a third straight quarter, by 2.3%.

“But the pressure on economic growth remains, and supportive fiscal and monetary policies must be continued”, Zhong said. Data surprised markets to the downside suggesting UK’s domestic market was hit by pre-and post referendum uncertainty.

This is down slightly from June when the figure was 53.2, and still indicates an expanding manufacturing sector.