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Manufacuring in a "shock" fall

Graham_Devon
Graham_Devon Posts: 58,560 Forumite
Part of the Furniture 10,000 Posts Combo Breaker
in Debate House Prices & the Economy
Manufacturing has "unexpectedly" shrunk from 50.5 in January to 47.9 in February.

Analysts are blaming the weather and the chinese new year.

It's seen the pound hit new lows not seen since 2010. Some now suggest theres a 45% chance of more QE this month as a response to this "shock" fall.

http://www.telegraph.co.uk/finance/economics/9902000/UK-manufacturing-shrinks-unexpectedly-in-February-triggers-slide-in-the-pound.html

Is there much point in starting QE again because manufacturing has fallen? Considering everyone appears to be reigning in spending at the moment, how is an extra dose of QE going to help? Our buyers are not buying as much.
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Comments

  • Moby
    Moby Posts: 3,917 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Told you so....time and time again.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Hardly a surprise given Honda in Swindon are laying off 25% of their staff.

    For the remainder of the year the plant is projected to run at 40% capacity.

    What's 150,000 cars worth to GDP, the bulk being exports?
  • stinktankcynic
    stinktankcynic Posts: 151 Forumite
    Some manufacturers are doing really well. Some could do even better, but foreign euro countries try and keep work in their own countries. Unfairly for us, the UK prefers to give work out abroad. Also, cash alone isn't always the problem, it's suppliers changing terms and reducing credit limits because of downgrades by credit agencies based on general info. If things are bad in the economy even strong solvent companies are downgraded. It's this sudden downgrading that causes a lot of problems, stops investments etc. The credit agencies failed big time with the depression. They should be forced to shown how inaccurate their data is, perhaps showing how many companies are still trading strongly after having a negative outlook or strong likelihood of failure after many years.
  • michaels
    michaels Posts: 29,340 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Well we had the G20 and Japan escaped censure for surging ahead in the currency wars so realising that there is nothing to support the GBP the markets are letting it find the level the UK govt intends - don't forget negative real interests rates (=inflating away debt) is 'official' govt policy and with insufficient demand to generate domestic inflation the only answer is to import it.
    I think....
  • prowla
    prowla Posts: 14,244 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    It looks like the "t" fell out.
  • grizzly1911
    grizzly1911 Posts: 9,965 Forumite
    prowla wrote: »
    It looks like the "t" fell out.

    From Boston.
    "If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....

    "big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham
  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    Graham_Devon wrote: »
    Is there much point in starting QE again because manufacturing has fallen? Considering everyone appears to be reigning in spending at the moment, how is an extra dose of QE going to help? Our buyers are not buying as much.

    QE is proving increasingly ineffective according to the Fed at least. I don't really see the point of another round. It's not so much that it'll cause inflation (it might do a little but really only a few 0.1%s).

    TBH I think we really are at the 'Zero Bound' now, the point at which interest rates can't fall any further.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Generali wrote: »
    QE is proving increasingly ineffective according to the Fed at least. I don't really see the point of another round. It's not so much that it'll cause inflation (it might do a little but really only a few 0.1%s).

    TBH I think we really are at the 'Zero Bound' now, the point at which interest rates can't fall any further.

    Have we reached ground zero. Where politicians have to make real decisions?
  • grizzly1911
    grizzly1911 Posts: 9,965 Forumite
    Generali wrote: »
    QE is proving increasingly ineffective according to the Fed at least. I don't really see the point of another round. It's not so much that it'll cause inflation (it might do a little but really only a few 0.1%s).

    TBH I think we really are at the 'Zero Bound' now, the point at which interest rates can't fall any further.

    I agree I really don't see that more of either will do much good.

    What next, just allow the continued further decline? How do we stop it accelerating?
    "If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....

    "big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham
  • grizzly1911
    grizzly1911 Posts: 9,965 Forumite
    Thrugelmir wrote: »
    Have we reached ground zero. Where politicians have to make real decisions?

    Should it be politicians making those decisions?
    "If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....

    "big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham
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