Don't panic over PMI says EEF

EEF chief economist Lee Hopley called for calm as Markit/CIPS data showed PMI at 51.3 -a near two year low. Hopley said: "Despite the pace of expansion in activity easing for the fifth month running this shouldn't be overplayed. Behind the headline the figure the detail shows production, export orders and employment all still edging up, albeit at a more subdued pace than earlier in the year. " The growth in export orders was the weakest during the manufacturing recovery, the Markit/CIPS data reported. Employment growth stood at a nine month low with reports of firms failing to replace departing staff and releasing temp workers. The reduction in orders could be linked to "subdued" domestic market according to the data. A reversal was unlikely anytime soon said Hopley. "However, with spending cuts now kicking in it is clear that any support to growth from the domestic market is likely to be minimal, which leaves UK manufacturers exposed to events in the global economy where persistent weakening of activity indicators across Europe and Asia would start to raise alarm bells about the UK's prospects." Hopley added: "The major conclusion is that looks certain the MPC [Monetary Policy Committee- which decides interest rates] will continue to sit on its hands for a while longer."