Today's manufacturing figures are a 'dismal start to Q4' says ITEM Club

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Nida Ali, economic advisor to the EY ITEM Club, comments on today’s PMI manufacturing figures:

  • A dismal start to the fourth quarter reflecting underlying weakness in the manufacturing sector
  • The outlook is still very uncertain and downside risks continue to dominate
  • GDP growth in Q4 is looking weak, implying that further monetary stimulus may be required to keep the recovery going

“This is a dismal start to the fourth quarter, reflecting underlying weakness in the manufacturing sector. While demand from the Eurozone was expected to be disappointing, reduced demand from Asia amid a general global economic slowdown is particularly discouraging.
 
“The outlook for the manufacturing sector is still very uncertain and downside risks continue to dominate. The Eurozone crisis is weighing heavily on the sector through various channels, from weak export demand to low business confidence. The possibility of a further escalation cannot be ruled out, which would further dent export demand and confidence.
 
“Today's release provides initial indications of weak or, possibly, no GDP growth in Q4. Although some MPC members have recently indicated that no further QE will be authorised once the current tranche comes to an end, the Bank may need to initiate further monetary stimulus to keep the recovery going.”