U.K. inflation to hover around 0% till end of 2015

The manufacturing PMI in U.K for November reduced to 52.7. The output index decelerated by 2.8 pp to 55.1 as new orders fell by 2.5pp to 54.1. The employment index recorded a sharp fall of -3.7 pp.

A sector level analysis revealsthe fall in the index is mainly driven by the intermediate goods which is contracted by 4.0pp to 51.7. Likewise, consumer goods are reduced by 1.6pp to 53.8 and investment goods by 0.3pp to 52.3 in November.

"Meanwhile, continued weakness in input & output prices, both significantly below their long-term averages and showing continued quarterly declines, signal more inflationary weakness is in the pipeline and bodes ill for expectations of a quick normalisation of inflation towards 2%; this is consistent with our view that inflation will hover around 0% till the end of 2015. Overall, we remain cautious in light of the continued divergence among different firm sizes and sectors given the importance SMEs play in the UK economy", said Barclays.