Recessionary signals boost rate hopes
Saturday 02 March 1996
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.
- 1 President of Argentina adopts Jewish godson to 'stop him turning into a werewolf'
- 2 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
- 3 The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
- 4 AirAsia flight QZ8501 missing: Plane carrying 162 passengers from Indonesia to Singapore disappears over Java Sea
- 5 Naomi Wolf reacts to Isis 'conspiracy theories' critism after she questions whether beheading videos are real
President of Argentina adopts Jewish godson to 'stop him turning into a werewolf'
Exclusive: Abusers using spyware apps to monitor partners reaches 'epidemic proportions'
ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
UK weather: Warning for more snow and ice as freezing temperatures and gales hit Britain
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Millions of Britons struggling to feed themselves and facing malnourishment
Immigrants make UK racist, says Ukip councillor Trevor Shonk
Nigel Farage: Ukip leader named 'Briton of the year' by The Times
iJobs Money & Business
Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...
Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...
Not specified: Selby Jennings: SVP Model Validation This top tiered investment...
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...