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UK Manufacturing Continued Contraction Forecasted

The Confederation of British Industry’s monthly industrial trends survey showed that U.K. manufacturers expect a fall in output over the next three months, with overall orders remaining relatively flat.

The likely slowdown comes despite an improvement in overseas demand and plans to charge marginally higher prices for goods.

What this means is that new orders from U.K. based firms fell sharply for a second straight month in November and that manufacturers are not expecting a significant pickup in demand from either overseas or at home anytime soon.

Coming in the middle of the fourth quarter and following a fall in October’s U.K. manufacturing PMIs, the latest data doesn’t bode well for the performance of the beleaguered sector in the final months of the year.

“The November CBI Industrial Trends survey shows soft orders and a marked falling back in near-term output expectations, thereby adding to the largely disappointing news out so far for the fourth quarter,” said Howard Archer, chief U.K. and euro-zone economist for IHS Global Insight.

The disappointing outturn comes hot on the heels of Bank of England member Martin Weale’s assertion that the U.K. economy could shrink again before it gets better, despite the surprisingly strong 1% quarterly GDP growth posted in the third quarter.

via WSJ [1]

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Alfonso Esparza

Alfonso Esparza [6]

Senior Currency Analyst at Market Pulse [7]
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza