Investing.com - Manufacturing activity in the U.K. expanded at a slower rate than expected in August, holding near the lowest level in more than two years, industry data showed on Tuesday.
In a report, market research group Markit said that its U.K. manufacturing PMI inched down to a seasonally adjusted 51.5 last month from a reading of 51.9 in July. Analysts had expected the index to rise to 52.0 in August.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
The performance of the UK manufacturing remained sluggish in August, as the continued strength of the consumer goods sector was again offset by lacklustre output growth at intermediate goods producers and the ongoing downturn in the capital goods industry.
The domestic market remained the main pillar of new order growth, as the level of new export business decreased for the fifth straight month. Companies linked reduced overseas demand to the sterling exchange rate, weak sales performance to the eurozone and the slowdown in China.
Commenting on the report, Rob Dobson, senior economist at survey compiler Markit, said, “The sector looks unlikely to make much of a contribution to the solid gain in broader GDP growth expected for the third quarter."
GBP/USD was trading at 1.5341 from around 1.5354 ahead of the release of the data, while EUR/GBP was at 0.7364 from 0.7358 earlier.
Meanwhile, European stock markets held on to sharp losses. London’s FTSE 100 plunged 0.35%, the EURO STOXX 50 sank 0.1%, France's CAC 40 dropped 0.2%, while Germany's DAX tumbled 0.1%.