Published: Sun, January 06, 2019
Money | By Ralph Mccoy

United Kingdom economy under pressure as Brexit deadline approaches

United Kingdom economy under pressure as Brexit deadline approaches

"The latest United Kingdom services PMI provides further evidence that the economy has lost most, if not all, of the momentum it had last summer", ING economist James Smith said. The government resolved a budget dispute with the European Union in late December, after a months-long standoff that had sent bond yields surging.

Additionally, panellists stated they had experienced improved export demand from the United Kingdom and the Middle East. Manufacturers responded to the increase in new orders by raising production in December.

A PMI reading for the 19-nation euro zone will be published at 10 a.m. Rome time. New orders also increased at a faster pace, but overall remained relatively muted, while export sales declined on the month.

December data pointed to a renewed slowdown in production growth across the Canadian manufacturing sector. "This meant that 2018 as a whole was the best calendar year for the sector since the PMI survey began in 2011 and leaves the industry well placed to have a positive 2019 despite headwinds elsewhere in the global economy".

December's modest rate of expansion was the slowest seen since September 2018.

"With input prices decreasing, Vietnamese manufacturers lowered their output charges accordingly", the survey states. Demand was also hurt by higher interest rates and economic uncertainty, the report said.

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Panel members noted that supply chain disruptions had contributed to higher levels of unfinished business at the end of the year.

Manufacturers suggested that heightened uncertainty about the demand outlook had led to more cautious inventory policies. The pace of inflation fell to an 11-month low.

Pantheon Macroeconomics' Samuel Tombs explained that Brexit was weighing on the economy, saying: "The continued weakness of the business activity index in December adds to evidence that the economy effectively has ground to a halt, primarily due to mounting concerns about Brexit". Factory gate prices rose at the softest rate in 2018.

Five US Federal Reserve (Fed) indexes of regional manufacturing all slumped in December, the first time they've fallen in unison since May 2016.

Today, the United States jobs report is projected to show 180,000 net hires in December, the lowest median projection ahead of the report in nearly a year.

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