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British PMI Weakens

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British PMI Weakens

Markit Economics have had a busy morning publishing various PMI figures throughout Europe. The latest data to be released is the British PMI Services number, this is well ahead of other neighboring countries at 57.6, it does represent a slight fall back on the UK’s February reading of 58.2 and also misses the markets consensus estimates of 58.1.

Today’s reading will offer little comfort following yesterday’s soft housing and construction figures in the UK. However there is still much optimism surrounding the British economy and despite the burdensome current account deficit Britain appears to be well on track for recovery.

The Bank of England Governor, Mark Carney, seems to be taking a leaf out of the US Feds book in looking beyond the headline data points that mark out the economy. The Fed chair, Janet Yellen, earlier in the week pointed to the structural nature of unemployment as a metric that will now be given priority when interest rates are being deliberated. Speaking to a newspaper yesterday, Carney reiterated that interest rate rises for the UK are on the cards but added that this would not occur until the unemployment situation in the North East of England picked up. Both Central Banker’s have now broken with their commitment to link rate to the headline employment numbers.

The engine of the British economy tends to be centered around London and surrounding major cities. The South East region of Britain is therefore further into recover than other parts of the country, this is in keeping with prior upturns that Britain has experienced over the years. Carney’s statement represents a renewed policy of regional growth stimulus, interestingly this is beyond the remit of a Central Bank which controls national monetary policy only. The Bank of England Governor was therefore likely attempting to send a message to Government that regional redistribution should be prioritised prior to any bank of England action.

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