The pound has dipped again at the end of this week, as the UK economy has showed signs of weakness following the Brexit vote.
Markit’s Purchasing Managers’ Index (PMI) fell to 47.7 in June 2016, according to figures published on Friday 22nd July, with output and new orders both dropping for the first time since the end of 2012. The 47.7 reading was the lowest reading since April 2009.
“July saw a dramatic deterioration in the economy, with business activity slumping at the fastest rate since the height of the global financial crisis in early-2009. The downturn, whether manifesting itself in order book cancellations, a lack of new orders or the postponement or halting of projects, as most commonly attributed in one way or another to ‘Brexit’,” explains Chris Williamson, Chief Economist at Markit.
“The one ray of light was an improvement in manufacturing export growth to the best for two years as the weak pound helped drive overseas sales, though producers also suffered the flip-side of a weak currency as import prices spiked higher.”
Indeed, new export business rose for the second month in a row in July 2016 and to the “greatest extent for almost two years”.
The figures prompted to pound to continue to weaken by 0.5 per cent against the dollar to $1.317.
The weaker pound has certainly proven a boost to the property world, with agents welcoming the opportunity for foreign investors to snap up a “once in a generation” bargain.
Michael Hewson, chief market analyst at CMC Markets UK, meanwhile, told CityWire that it was important not to read too much into the figures.
“The big and important question now is whether this slowdown heralds a more permanent economic condition, or whether in the final days of July, we get a pickup in activity now that we have a more stable political environment and the “Brexit” fog has started to clear a little,” he said.
Investment specialists Aspen Woolf told TheMoveChannel.com earlier this month that the firm had seen overseas enquiries rise by 32 per cent post-Brexit, while Flambard Williams highlighted the unchanging fundamentals still driving the housing market, regardless of wider economic trends.
“People still need a place to live, demand is outweighing supply and property prices are high. Combine these factors together and you have a great sector where clients can invest,” said Christopher Whetstone, Managing Director at buy-to-let specialists Flambard Williams Limited.Google+