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UK Data Near 30 Year Lows

The pound was flat this morning before the release of preliminary UK PMI data for April, which was expected to show a sharp decline in economic activity as the coronavirus lockdown brings British business to a halt.

At 32.9 in April, down from 47.8 in March, the UK Manufacturing Purchasing Managers’ Index– a composite single-figure indicator of manufacturing performance – was the lowest since this survey began in January 1992.

At 12.9 in April, down from 36.0 in March, the Composite Output Index – which is based on approximately 85% of usual monthly replies – indicated that the combined monthly decline in manufacturing and services activity exceeded the downturn seen at the height of the global financial crisis by a wide margin. Prior to March, the survey-record low was 38.1 in November 2008.

The UK Services PMI Business Activity Index plummeted to 12.3 in April, from 34.5 in March, to signal by far the sharpest reduction in service sector activity since the survey began in July 1996.

Last month’s data showed Britain’s economy is shrinking at a record pace, faster than during the 2008-09 financial crisis. Unlike the data for March, the UK was in lockdown for the whole of the period covered by April’s reading.

The dollar continued to climb, as it has every day this week, even after the promise of more U.S. government aid to cushion the coronavirus-ravaged economy helped calm nervous markets somewhat. In early London trading, cable was down 0.1%, at $1.2325.

Also, later on today leaders of European Union countries will meet to discuss the EU response to the crisis – negotiations which so far been hampered by disagreements on how to finance aid to help the worst-hit economies, such as Italy.

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