Chief Economist at World First Jeremy Cook has been watching the financial markets today as the latest Manufacturing Purchasing Managers’ Index figures are announced. This is what he had to say long with advice for online sellers who may be impacted by the economic slowdown:
Another day, another indicator of UK economic performance falls to a 7 year low. The 4.6 point fall in the strength of UK economy between June and July is the largest decline in the near 20 year length of the survey and backs up the belief that the most important sector within the UK economy took a substantive body blow in the weeks post-Brexit. That is not to suggest that this will continue. Uncertainty in these numbers are high and one cannot legitimately predict a recession off one month’s numbers; one swallow doesn’t make a summer and nor does one frost make a winter but a continuation of this trend will see Q3 GDP fall into negative territory.
Services businesses do expect business activity to increase in the next 12 months but confidence is low and will remain so until we see some form of support to UK businesses from government and monetary authorities and clarification from Westminster on what Brexit really means.
The key question now for sterling is whether the two weeks between the estimate of the Manufacturing Purchasing Managers’ Index and these final numbers have further driven Monetary Policy Committee members at the Bank of England into a mind-set of stimulus with quantitative easing.
As such it seems as though the Bank of England thinks a recession may be coming and they need to pump money into the economy. With retail sales down online sellers may want to start looking at emerging markets or the US to ensure they keep a +% on sales with a UK/European slowdown in their respective economies.