Yesterday, Rachel highlighted the disappointing UK manufacturing PMI release for July. While it's difficult to put a positive spin on a 38-month low, it is worth having regard for what's happening in the rest of the world.
Looking across some of our key markets shows that, with the exception of Ireland, all manufacturing PMIs are in contraction territory. The USA and China are the most positive but are still below the neutral red line.
So is manufacturing in 'crisis globally' as City AM has said today? Or is the performance of the sector more closely connected to the general depression in confidence being generated primarily by the ongoing eurozone crisis?
I think the generalised downturn across many countries and regions in the world sugggests this is not a manufacturing problem per se but a more generalised period of slower world demand. That slowdown in world demand is undoubtedly driven by the buffeting consumer and investor confidence is taking.
While the biggest force pushing down on confidence is what's happening in Europe, the weakness in China and particularly the U.S. is not solely down to this.
The slowdown in U.S. job creation and expiry of investment incentives at the end of last year are clearly playing a role there and China's internal demand has yet to pick up as hoped - though may be helped by monetary policy easing that is in the pipeline already.
So this is the demand context the government is faced with. Our summer reading list is highlighting the need for a renewed focus on growth when the Coalition returns from recess.