The Purchasing Managers Index (PMI) Manufacturing reports have now been released for the month of August. At first glance the readings for nations scoring above the key 50 level rose by 1 to 15, and those below 50 fell by 1, to 21.
Out of the G8, only France & the US currently stand above 50 (France has been flirting with the level for much of this year). Interestingly, 75% of developed countries now have a reading below 50 and Germany languishes at the bottom of the pile, with a reading of just 43.5.
In addition to the PMI releases, the US reported the ISM Manufacturing data which came in at 49.1, well below expectations of 51.3, and is the lowest level since January 2016. The New Orders component fell further, to 47.2 and the Employment component fell to 47.4. Export orders fell to 43.3, the lowest reading since 2009, but perhaps no real surprise given the current trade situation with China.
Goings on in the UK has seen Sterling hit a new recent low of 1.1959 against the dollar. After losing his first parliamentary vote (328 to 301) as a rebel alliance took control of Brexit timing, Johnson said he is prepared to seek an early general election to deliver Brexit. However, that requires a 2/3 majority and the opposition leader said he would oppose that until no-deal is formerly off the table.
A total of 21 Conservative MPs, including well known and respected Nicholas Soames, the grandson of Winston Churchill, the previous Chancellor Philip Hammond, and Ken Clarke, have been thrown out of the party.
At 1.2150, cable may be back to where we were a couple of days ago, but UK politics is certainly not. Clearly, with Boris Johnson’s “do or die” Brexit policy now on life support, his first PM Questions will be eagerly awaited. In the meanwhile, at 47.4, the recently released UK Manufacturing PMI was the lowest since 2012, and unsurprisingly was led by a drop in new orders.
Whilst Brexit may be a law unto itself at present, clearly the global economy is not doing much better from a manufacturing perspective and the march for lower yields continues.