There have been encouraging signs that stronger growth in manufacturing is helping to offset the slowdown in the consumer-facing parts of the services sector. Indeed, according to the Markit/CIPS surveys, other than brief periods in late-2007 and in 2011, the manufacturing PMI has not looked as strong relative to its services counterpart since the surveys began in 1996.
Admittedly, with the boost to the manufacturing sector from the drop in the pound likely to fade, this outperformance probably won’t last long. And since the sector only accounts for 10% of the whole economy, it clearly can’t drive solid GDP growth on its own. Nonetheless, we don’t think that it will be too long before the services sector regains some vigour. In the meantime, though, the manufacturing sector looks well-placed to provide valuable support to growth.
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