U.K. Fundamental Deteriorates, Stoking Fears of a Severe Recession

U.K. November manufacturing PMI tumbled to a new series low of 34.4, against our survey median for 39.8. The September reading was revised down to 40.7 from 41.2. A breakdown of the headline reading showed output, new orders, employment, backlog of work and quantity of purchases all reaching new series lows. New export orders also fell while both input and output prices tumbled. In addition, U.K. October net mortgage lending was just GBP0.46 bln, below our survey median forecast for 1.5 bln and compared to 1.49 bln in September (revised from 2.17 bln). Meanwhile, new mortgage approvals were 32k (median same) versus 33k in September. Overall, October data highlight the dire state of the U.K. housing market. And the recent credit crisis intensification, combined with a deteriorating labor market outlook, are likely to keep mortgage lending at very low levels, even as the BoE is expected to cut rates aggressively.

Meanwhile, Pound remained at session lows after U.K. PMI, Cable eyes stop losses below 1.5100 and EUR/GBP is closing in on 0.8380 offers.

DailyFX

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