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Business FX Blog

Adam Solomon is a specialist in business foreign exchange issues at foreign exchange brokers TORfx.

The idea of this column is to assist businesses in saving money on making or receiving payments in foreign currency. It is developed with all companies in mind from public companies with large and complex operations, to smaller companies and individuals.

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Home Financial Banking RBS: UK and US manufacturing helping sustainability

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RBS: UK and US manufacturing helping sustainability PDF Print E-mail
Written by Sam Coventry   
Monday, 08 February 2010 15:04

RBS economic weekly economic review.



RBS (LON:RBS) have said that the latest sets of manufacturing data out of the US and UK suggest that the two economies are correcting in a sustainable fashion.

RBS point out that on both sides of the Atlantic the recovery appears to be gaining a firmer foothold in the manufacturing sector than in the larger service sector.

"If this pattern continues it will help them narrow their trade deficits and re-balance towards a more sustainable growth path," reads an RBS economic note.

RBS also believes that the service sector is improving, despite a slow down recorded in January.

The Purchasing Managers’ Index (PMI), a leading guide to economic activity, suggests that growth in the service sector slowed in January after a bounce in Q4, although heavy snow and cold weather accounted for part of the deceleration.

Construction activity continued to contract, although the rate of decline was the slowest in two years, boosting hopes that the sector may be stabilising.

The manufacturing PMI showed signs of some emerging strength.

The headline activity index came in at 56.7 in January, up from 54.6 in December, marking its fourth consecutive monthly increase. Output rose at the fastest pace for over three years, and new orders showed the strongest increase in six years.

The weaker pound also helped boost export orders, now at a series record, which mainly benefited investment goods, while domestic strength underpinned demand for consumer goods.

RBS on UK interest rates


"The Monetary Policy Committee (MPC) decided it had done enough to boost the UK economy, for now. As anticipated, rates were left unchanged at 0.5%, and the MPC did not ask the Treasury for an extension to the asset purchase scheme (aka quantitative easing).

"With £200bn of assets already purchased, and short-term rates at historic lows, the MPC concluded that sufficient assistance had been provided to ensure that the inflation target will be met over the medium term. But they left the door open for an extension by pausing, rather than concluding, QE. The recovery is likely to encounter stumbling blocks, so the MPC decided to keep the choice of policy tools in their armoury as wide as possible."