Although our publishing schedules mean that we don’t have the US figures yet, the January flash Purchasing Managers’ Index (PMI) for the manufacturing sector showed an improvement compared to December for all of the countries reported, including the UK. With Japan moving from its neutral position last month, only Germany and the Euro-zone aggregate are still below the crucial 50 mark in the latest release.
For the UK, the flash estimate for January was 51.6, which is the highest since August 2024 and gives us 3 consecutive months above the 50 threshold; while December 2025 saw the final figure come out lower than the flash estimate, it seems likely that this positive trend is valid. There was an improvement in the output element of the index which is a note of contrast with the CBI survey reported in our item on those results. Some manufacturers reported a rise in export sales, while others signalled a boost from customer restocking. There was also a rise in export orders for the manufacturing sector – the first in 4 years -with a wide spread of markets showing stronger demand.
While not directly part of the PMI calculation, the report also notes that both the manufacturing and service sectors recorded marked improvements in confidence, with anecdotal evidence citing planned business investment and a turnaround in sales pipelines, alongside a recovery in broader economic conditions and lower borrowing costs. However, this was counterbalanced by concerns, among other things, about geopolitical uncertainties.
Although the Euro-zone aggregate flash PMI reading is still in negative territory at 49.4, this is an improvement on the December figure that comes, in part at least, because the output element tipped just over the 50-mark. As with all of the flash reports, this covers both manufacturing and service sectors and there is not much detail specifically about the former part of the economy, except to note that employment fell again in the manufacturing sector – this is not a surprise since this often lags the activity cycle. The other negative factor was manufacturers reducing their purchasing activity, although this was at its slowest for six months, so it is also moving in the right direction.
We only have country reports for France and Germany among the Euro-zone countries; while having the same positive trend compared to December, France is above the 50 threshold, while Germany is still pointing to a contraction of activity in the sector. France built on the positive December figures thanks to output increasing to the strongest level in almost 4 years. Interestingly, their service sector moved sharply in the opposite direction. Despite the improvement in output, French manufacturers recorded a fall in new orders, although this is hard to reconcile with another part of the report that notes that “manufacturers recorded the strongest rise in outstanding orders (backlogs) since May 2022.”
Germany also saw manufacturing output turn positive but this is only a reversal of the weak outcome in December. However, despite a significant fall in employment, their manufacturing sector recorded a marginally positive trend for new orders, following two months of sharp reductions, helped by a slower decline in export demand.
The 3 Asian countries that have a flash manufacturing PMI report all recorded an improvement compared to December. India still leads the way with a reading of 56.8 and Australia’s figure of 52.4 is their best since last August; however, it is Japan, where the flash manufacturing PMI was 51.5, that has seen the most improvement which has taken the reading to their highest since the same value was recorded in August 2022.
You can access all the flash reports, including the one for the USA which had not been released by the time of our publishing deadline, on the “PMI by S&P Global” website at https://www.pmi.spglobal.com/Public/Release/PressReleases or on request from MTA.