Forexpros — Manufacturing activity in the U.K. fell more-than-expected in July, dropping to the lowest level since June 2009, official data showed on Monday.
In a report, market research group Markit said that its U.K. manufacturing PMI fell to a seasonally adjusted 49.1 in July, down from a reading of 51.4 in June, whose figure was revised up from 51.3.
Analysts had expected the manufacturing PMI to ease down to 51.0 in July.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
Operating conditions in the U.K. manufacturing sector deteriorated for the first time in two years during July. Output growth slowed closer to stagnation, as new orders declined at the fastest rate since May 2009.
The weaker performance of the sector impacted on the labor market, as manufacturers lowered employment for the first time in 16 months.
Commenting on the report, David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, said, “Alarm bells are ringing or the U.K. manufacturing sector, which has seen conditions deteriorate rapidly since the start of the year.”
Mr. Noble added that, “weaker consumer demand, sluggish domestic orders and a conservative approach to inventory holdings are weighing down on the overall health of the sector.”
Following the release of the data, the pound was down against the U.S. dollar, with GBP/USD shedding 0.07% to trade at 1.6415.
Meanwhile, European stock markets were broadly higher. The FTSE 100 rose 0.95%, the EURO STOXX 50 gained 0.45%, France’s CAC 40 advanced 0.55%, while Germany’s DAX climbed 0.6%.
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