Day by day, the vote for Brexit on 23 June is coming more and more to resemble Black Wednesday, the day when sterling plummeted out of the Exchange Rate Mechanism (ERM). Then, as now, the event was initially treated by many as a national calamity – before it steadily became apparent just how a big a fillip it had provided the economy. This morning’s good news is the Markit/CIPS Purchasing Managers’ Index (PMI), which surged to 53.3 in August. This more than makes up for the plunge to 48.2 in July. Anything above 50 indicates expansion in activity, and anything below 50 contraction. The month-on-month rise was the largest in 25 years.
July’s figure for manufacturing PMI was a big contributor to the Bank of England’s decision to lower interest rates and expand quantitative-easing last month. Some will still try to attribute that for the turnaround, though there is a rather more obvious elephant in the room: a fall in the pound, which began on the morning of 24 June, long before the Bank of England lowered interest rates.
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