UK manufacturing bounces back
UK manufacturing exceeded expectations in May as activity climbed to a fourteen month high. The UK manufacturing PMI rose to 51.3, increasing from an upwardly revised 50.2 in the previous month, the highest reading since March 2012. The detail of the report revealed output and new orders continued to grow, while the employment balance rose to 50.6, the first reading showing growth since January. The main driver of the improvement was from domestic demand as new export orders remain subdued.
Eurozone manufacturing remained in contraction territory but moved a step closer to returning to growth in May. The final manufacturing PMI index rose to 48.3, up from 46.7 in April. The new orders and new exports indicators showed marked improvement, while the decline in output and employment eased. An improvement in the level of decline was spread across the region’s four largest economies.
By contrast, manufacturing in the US slipped to the lowest level since 2009. The ISM manufacturing index fell back into contraction with a reading of 49.0 in May (consensus 50.5), down from 50.7 in April. New orders, current production and supplier deliveries all slipped back into contraction, marking a new low in the current economic expansion.
The stronger than forecast UK manufacturing PMI data coupled with the weak US manufacturing release saw GBP/USD rise nearly 2 cents to a two week high of $1.5374. The weak US data also weighed on EUR/USD which registered gains rising over 1 cent to a high of $1.3107.