U.K. manufacturing growth slowed more than expected last month, casting doubt on the strength of the economy as Bank of England policy makers hold their crunch meeting.
IHS Markit's Purchasing Managers Index for the industry fell to a three-month low of 54 in July, from 54.3 in June, the firm said in a report Wednesday. The reading was below economists' estimates for a figure of 54.2.
Markit said output growth slowed to a 16-month low, with production of intermediate goods falling for the first time in two years. A weaker expansion of new work from domestic sources offset a stronger increase in export orders, while positive sentiment among manufacturers slid to a 21-month low, amid concerns over Brexit uncertainty and the exchange rate.
“U.K. manufacturing started the third quarter on a softer footing,” said Rob Dobson, director at IHS Markit. “Manufacturing has failed to provide any meaningful boost to headline GDP growth through the year-so-far,” while the data on new orders and business optimism suggest the “industry is unlikely to exit this soft patch in the near future,” he said.
The report comes in the week of the BOE's August meeting, at which investors currently see a more-than 90 percent chance of an interest-rate hike. Markit's report on the U.K.'s dominant service sector, forecast to show a slight slowdown in growth, isn't due to be released until Friday morning, a day after BOE officials announce their decision.