U.K. Manufacturing Slips to Record Low, Fueling Recessionary Fears
Manufacturing activity in the U.K. contracted for the fifth consecutive month, falling to a fresh record low of 41.0 from a revised reading of 45.3 in August. The data suggests that the economy may slip into a recession in the third quarter as the housing and financial crisis continue to take a toll on Europe’s second largest economy. Meanwhile, the index of services was unchanged after rising 0.2% in June, signaling that economic activity may remain subdued for the rest of the year as the BoE continues to hold a neutral policy stance. However, as the downturn in the economy accelerates, the central bank could be forced to lower the benchmark interest rate as growth prospects turn increasingly dim.