Rate cut looms as manufacturing data disappoints
01 October 2008
The UK manufacturing sector contracted in September at its fastest pace since records began in January 1992. The Chartered Institute of Purchasing and Supply Managers (CIPS) said its purchasing managers’ index fell to 41.0 from a downwardly revised 45.3 in August and was well below the consensus forecast of 45.0. A number below 50 denotes contraction while a reading above 50 shows expansion.
Although the UK economy typically centres around the service sector (data due on Friday) today’s news will prompt speculation that we could see a rate cut in the UK as early as next week’s meeting as the Bank of England attempts to stave of the risk of recession.
The impact on Sterling was relatively muted with attention still focused firmly on the outcome of talks surrounding the $700bn US rescue package.