UK PMI manufacturing PMI (purchasing managers index) beat expectations in June and reported at 48.6, versus 46.5 forecast. This was an improvement from May’s 45.9 figure.
The main driver behind the increase in PMI was falling input prices which dropped at the fastest pace in three years, therefore easing costs on the manufacturing sector.
Despite an uptick in the index, any PMI below 50.0 indicates a decline in the sector. The UK economy is still struggling to recover from a recession and the Bank of England is widely expected to raise stimulus in their next policy meeting this month. Recent comments from BOE Governor Mervyn King show a growing concern over the effects of the European debt crisis on the UK economy.
Sterling however was lifted after the PMI data today, giving GBPUSD a boost to 1.5699 from where it was before the news at 1.5663.
Meanwhile, euro zone manufacturing PMI data also showed better than expected numbers. The region’s manufacturing PMI data for June came in at 45.1 which was better than May’s 44.8. Expectations were for the index to remain unchanged.
However, factory output in the region remains near three-year lows. Any number below 50.0 signifies contraction, while above the 50.0 level shows expansion.
Germany’s PMI for manufacturing was reported at 45.0, which although it is a 3-year low, was still better than the initially estimated 44.7.
The euro has been correcting today from a large move up against the dollar on Friday as a result of a successful EU Summit. EURUSD rose slightly to 1.2644after the PMI today, up from a European session low of1.2610.