Investing.com – The contraction in manufacturing activity in the U.K. in July was confirmed to be worse that initially estimated, hitting its worst level since early 2013, according to industry data released on Monday.
In a report, market research group Markit said that its U.K. manufacturing PMI fell to a seasonally adjusted 48.2 last month from a reading of 52.1 in June.
That was its worst level since 2013 and came below the a preliminary report released on July 22 that had shown the PMI drop to 49.1 in July.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
In the report, Markit indicated that the domestic market was hit by uncertainty both before and after the U.K.’s June 23 referendum that resulted in a decision for Britain to leave the European Union (EU), known as a Brexit.
Still, the market research group noted that weaker sterling exchange rates aided new export order growth.
“The weakening order book trend and upswing in cost inflation point to further near-term pain for manufacturers,” Rob Dobson, senior economist at survey compiler Markit, said.
“On that score, the weak numbers provide powerful arguments for swift policy action to avert the downturn becoming more embedded and help to hopefully play a part in restoring confidence and driving a swift recovery,” Dobson added.
The Bank of England will release its rate decision, minutes of its Monetary Policy Committee meeting and its quarterly inflation report on Thursday.
A Reuters poll of economists published on July 26 predicted the British central bank would cut its benchmark interest rate to 0.25% from 0.50%, but most said it would not revive its massive bond-buying program for now.
After the report, the pound weakened. GBP/USD was trading at 1.3209 from around 1.3229 ahead of the release of the data, while EUR/GBP was at 0.8459, compared to 0.8444 prior to the report.
Meanwhile, European stock markets were trading higher. London’s FTSE 100 rose 0.37%, the Euro Stoxx 50 gained 0.47%, France's CAC 40 advanced 0.43%, while Germany's DAX traded up 0.87%.