Pound Tumbles After U.K. Manufacturing PMI Deteriorates on Brexit Woes

July's manufacturing PMI comes in at 49.1, well below estimates.
By Lisa Botter ,

More bad news for a post-Brexit Britain came today as the July's flash manufacturing PMI figure fell dramatically against the June figure and missed expectations. This was one of the first PMI readings to have responses taken after the U.K. voted to leave the European Union on June 23.

The July reading fell to 49.1 from 52.1 in July, a 41-month low. Economists were expecting a reading of 48.7.

The flash services PMI index was at 47.4, down from 52.3 in June, against a forecast of 48.8.

A reading of below 50 signals contraction.

The pound fell after the figure was released and had recently lost 0.36% against the dollar to $1.3185. The currency was up 0.30% against the dollar before the readings came out.

The U.K. PMI composite index, with readings from manufacturing and service, fell to 47.7 in July from 52.4 in June; a reading of 49 had been forecast.

"July saw a dramatic deterioration in the economy, with business activity slumping at the fastest rate since the height of the global financial crisis in early-2009," Markit chief economist Chris Williamson said in a statement.

Williamson said respondents most commonly attributed order book cancellations, lack of new orders, or the postponement or halting of projects to Brexit.

The weak pound, however, resulted in manufacturing export growth.

The survey is signaling a 0.4% contraction of the economy in the third quarter, Williamson said. "Given the record slump in service sector business expectation, the suggestion is that there is further pain to come in the short-term at least," he added.

Markit urged policymakers to take swift action to stop further declines.

The FTSE 100 was recently down 0.10% to 6,706.55. In Frankfurt, the Dax was down 0.10% to 10,145.74 and the Cac 40 gained 0.13% to 4,381.93.

The French market was buoyed by a better than expected PMI reading for July, coming in at 48.6 against a forecast of 48 and a June reading of 48.3.

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