Growth in the UK manufacturing sector eased further in April, after reaching a record high level in January. In April, UK manufacturing PMI fell from a downwardly revised 56.7 to 54.6, the lowest level since September last year, while the consensus was looking for a stabilization. Weakness was mainly based in domestic demand, probably due to the harsh budgetary measures, while the weak sterling supports export orders. After growth disappointed in the first quarter, this is another sign that the recovery in the UK remains uneven, raising expectations that the Bank of England will decide tomorrow to keep policy unchanged for now as a rate increase might bring the recovery in danger.
In the UK, the CBI distributive trades report showed that high street sales rose from 15 to 21 in April, but the pace of growth remains subdued, the CBI added. Orders placed upon suppliers were unchanged from a year ago, while sales for time of the year remained depressed (-23 from -24). Also for May, expectations are poor as volume of sales is expected to decline slightly (-1), while sales for time of the year will probably remain depressed (-18 in May from -16). Despite somewhat better year-on-year growth, conditions for retail sales remain poor with especially sales for dearer goods hard-hit.