GBP
A two-year spell of jobs growth across British factories came to an end last
month as manufacturing activity expanded at a slower pace, suggesting the
sector is unlikely to boost economic growth during this quarter. The UK
Manufacturing Purchasing Managers’ Index (PMI) fell in August to 51.5 from 51.9
in July, confounding expectations for a rise to 52.0.

While still holding above the 50 threshold for growth, the survey underlined

GBP
A two-year spell of jobs growth across British factories came to an end last
month as manufacturing activity expanded at a slower pace, suggesting the
sector is unlikely to boost economic growth during this quarter. The UK
Manufacturing Purchasing Managers’ Index (PMI) fell in August to 51.5 from 51.9
in July, confounding expectations for a rise to 52.0.

While still holding above the 50 threshold for growth, the survey underlined
Britain’s reliance on its services sector and big-spending consumers to drive
the economy. There were mixed signals for the manufacturing outlook. New orders
came in at the fastest pace in five months but export orders continued to
contract, while backlogs of work shrank at the fastest pace since March 2013.
And the PMI’s jobs index fell below 50 for the first time since April 2013,
adding to recent signs Britain’s labour market has cooled off after a two-year
strong run.

Markit said prices paid by manufacturers for raw goods and energy plunged at
the fastest pace since January, suggesting little sign of inflation pressure in
the pipeline from British industry. Oil prices fell near a 6-1/2-year low
last week, entrenching expectations of low inflation in advanced economies and
pushing back market expectations for the first Bank of England interest rate
hike from the Bank of England deep into next year..

EUR
Unemployment in the Eurozone fell to its lowest rate in July for more than
three years. European Union statistics agency Eurostat said the jobless rate in
the currency union fell to 10.9% in July from 11.1% the month before. The fall
was helped by a sharp fall in unemployment in Italy, where the jobless total
fell by 143,000. It is the first time the unemployment rate in the Eurozone has
been below 11% since February 2012. 

A survey released earlier on Tuesday suggested that growth in the Eurozone’s
manufacturing sector had eased slightly in August, despite factories barely
raising prices. The closely-watched Markit Eurozone manufacturing
purchasing managers’ index (PMI) was 52.3 last month, below a preliminary
reading that suggested it had held steady at July’s reading of 52.4. However,
it has remained above the 50 mark that separates growth from contraction for
more than two years. 

With inflation still far from the ECB’s target rate of just below 2%, and
looking likely to stay there for the foreseeable future, speculation is growing
the bank will have to extend its stimulus programme beyond the planned
completion in September 2016.

Key Announcements

09:30 – GBP:  Construction PMI – Expected to rise to 57.6 from 57.1.
13:15 – USD:   ADP Non-Farm Employment Change Expected to rise to
204K From 185K.