U.K. manufacturing shrank more than initially forecast in July, showing the biggest drop in over three years. The Purchasing Managers’ Index slumped to 48.2, from 52.4 in June. The 50 mark separates expansion from contraction, and the index has only fallen below the 50 mark one other time since early 2013.
Although BOE policy makers kept the benchmark rate at 0.5 percent in July, they signalled that policy loosening was likely in August. The nine-member Monetary Policy Committee will announce it’s next decision on Thursday, and will also publish new forecasts for growth and inflation. Most economists seem convinced that a rate cut is on the cards this week, and the weak numbers may be seen as a strong argument to do so.
U.S. factory growth expanded at a slower pace in July, as manufacturers remained concerned about the implications of Brexit, according to an industry report released on Monday. The Institute for Supply Management Manufacturing Index for July dropped by 0.6 points to 52.6, while economists had expected an unchanged reading of 53.2. Factories cut back on employment, although orders and production remained strong last month. This indicates that producers are focused on cost-cutting, as the economy struggles to gain speed.
The European banks’ stress test results released on Friday showed that most lenders would keep an sufficient level of capital in a crisis. Persistent doubts over the resilience of banks, particularly those in Italy, have hit banking shares in a big way this year. Meanwhile, manufacturing growth in the Eurozone came in lower in July, at 52.0.
09:30 - GBP - Construction PMI is forecast to decrease to 44.2