The U.K. PMI manufacturing gauge fell to 45.8 from 49.5 in May, the lowest since 2001. The sector fell further into contraction as higher credit costs and rising oil and raw material costs continue to weigh on producers, which saw output decline to 43.5 from 49.2. A closer look at the breakdown revealed that new orders, backlogs of work, finished goods and employment all fell as well. Expectedly input and output prices rose as companies continue to see their margins get squeezed. The credit crisis, housing slump and rising commodity prices have taken a severe toll on the country’s economy as it slips closer to a recession. Expectations are that the sector will contract further next month, which may prevent the BoE from raising their benchmark interest rate as they try and rein in inflation 3.3%, above their 3% threshold. – John Rivera, Currency Analyst
