Recessionary signals boost rate hopes
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.DIANE COYLE
and PAUL WALLACE
Signs of recession in manufacturing and weaker inflationary pressures in both Britain and the US boosted financial markets on both sides of the Atlantic yesterday, thanks to hopes of lower interest rates.
The UK purchasing managers' index of manufacturing activity fell in February below 50 - the dividing line between expansion and contraction - for the first time since November 1992. Its US equivalent barely recovered from the previous month's weather-related decline and remained below the recession level of 50 for the seventh month in a row.
"The February Purchasing Managers' Index suggests that manufacturing industry is teetering on the brink of recession," said Adam Cole, UK economist at James Capel. He predicted base rates would fall from their current level of 6.25 per cent to as low as 5 per cent.
When the Chancellor, Kenneth Clarke, meets Eddie George, Governor of the Bank of England, on Thursday, he will be able to point to encouraging news on prices and the overall weakness in manufacturing. The survey's prices index fell from 49.1 to 44.4, its lowest level since January 1992.
A further sign of weakness was that the employment index remained below 50 for the second month running. There was also a sharp fall in new orders.
Forecasts that the Federal Reserve would reduce interest rates another notch helped push shares higher in New York yesterday. The Dow Jones surged 51 points to close at 5537.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments