UK Final Manufacturing PMI matches estimates with 40.7 in May, Cable battles 1.2400

The UK manufacturing sector activity contracted as expected in the month of May, the final report from IHS Markit showed this Monday. 

The seasonally adjusted IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) was revised up to 40.7 in May versus 40.7 expected and 40.6 – May’s first reading.

Key points              

Output, new orders and employment fall sharply.

Input price and output charge inflation remain moderate.

Rob Dobson, Director at IHS Markit, commented on the survey

“Those who typically see the glass half empty will note that the UK manufacturing sector remained mired in its deepest downturn in recent memory. Output, new orders and employment fell sharply again in May as restrictions to combat the spread of COVID-19 caused further widespread disruptions to economic activity, demand and global supply chains.“

“However, the glass-half-full perspective is one where the rate of contraction has eased considerably since April, meaning – absent a resurgence of infections – the worst of the production downturn may be behind us. Pressure on manufacturers should ease further as lockdown restrictions are loosened, customers return to work and global activity restarts.”

FX implications

The GBP bulls retain control following the upward revision to the UK Manufacturing PMI for May, as GBP/USD wavers around 1.2400.

At the press time, Cable trades at 1.2397, still up 0.44%, off the 1.2425 highs after the US dollar index bounced-off lows amid a fresh risk-aversion wave, as investors sold risk on fresh US-China trade war headlines.