The past 24 hours have seen more worrying signs for the UK economy. The pound has looked like a softly deflating tyre this week against both the US dollar and the euro, with the dollar firmer across the board.
The clearest datapoint yesterday was the March purchasing managers’ index (PMI). The UK’s composite reading slipped to 51.0 from 53.7 in February — still in positive territory at over 50, but with business showing clear signs of slowing down.
In the US, the equivalent composite edged down to 51.4, an 11-month low, with firms pointing to rising energy costs. A surprise then, to see German manufacturing bosses at their most bullish for several years, with PMI rising to 51.7, far above expectations.
This morning’s inflation figure from the Office for National Statistics (ONS) was taken before the impact of the war in Iran. Although headline inflation remained stable at 3%, ‘core inflation’ rose unexpectedly to 3.2%. This is the reading with more volatile food and fuel taken out, so hardly a good sign for next month.
The big worry remains oil prices, with warnings of global recession if it stays high. The UK’s PMI report said that the rise in oil and gas prices has led to production costs at British factories rising at the quickest pace since Black Wednesday in 1992.
The oil markets are still listening out to messages from the White House, despite reports of insider trading and vast profits being generated around Trump’s various announcements.
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