Britain’s manufacturing growth is likely to outpace services, Lombard Street Research predicts.
Michael Taylor, a senior economist, writes in his UK Bulletin that December’s PMI surveys show a divergence between the “booming” manufacturing and the “faltering” construction and service sectors.
The relatively weak performance may be attributed to snow and sub-zero temperatures, Taylor writes. But the trend of a more buoyant manufacturing than service sector is likely to persist through the year ahead. (article continues below)
Signalling a contraction for the first time since April 2009, the services PMI fell by over three points in its biggest monthly drop since October 2008. The construction PMI fell to 49.1, the first sub-50 reading for almost a year.
The manufacturing PMI, on the other hand, rose to a 16-year high of 58.3 as exports rose and sterling remained weak.
Lombard Street research forecasts slower quarterly growth than the 0.7% current estimate for the third-quarter. However, Taylor says recent data suggest that the British economy as a whole continued to grow at a reasonable pace at the end of last year.