Following disappointing manufacturing figures released on Monday, yesterday we saw the construction sector follow suit. In August, UK construction PMI fell to 52.9 from the previous month’s 14-month high. This was some way below the 55.0 the markets had been expecting and there is growing concern over what Brexit is doing to the UK economy. UK businesses are clearly suffering a crisis of confidence as Brexit looms on the horizon.
However, the truth is that opinion was divided on what the figures indicated. Some analysts argued that in the context of Brexit, a steady ship should be seen as a real achievement, while others were concerned about the reading’s proximity to the 50 threshold. It is said that when the figure falls below 50 it is a reliable predictor for a future recession. With that in mind, the next few month’s readings will be watched closely.
Today we have new car sales for August. Last month, sales stabilised following an extremely turbulent six months, so it will be interesting to see if demand continues. We will also see the services PMI reading for August. In recent months, the services sector has helped boost the UK economy and compensated for dips in manufacturing and construction. Indeed, it is expected that the figure will increase to 53.9 from 53.5 in the previous month – but will the figure disappoint?