The flash Purchasing Managers’ Index (PMI) figures for the manufacturing sector that were published at the end of last week were, with a couple of exceptions, positive. For the UK, the reading edged up to its highest level for 18 months, thanks mainly to a faster pace of expansion for output, although export orders were also up.
Other things to note about the UK are that, as expected, manufacturing employment continues to fall – this usually lags behind the activity cycle – but that as well as current output improving, production forecasts were at their strongest for 1½ years.
In Europe, the flash manufacturing PMI for the Euro-zone was at its highest for 44 months and recorded only its second positive reading in that period (plus one of exactly 50). Again, this came mainly as the output element of the calculation improved to a six-month high but manufacturing orders increased (albeit only modestly) for the first time in 6 months and the index was also strengthened by a further lengthening of suppliers delivery times.
At this stage we only have a breakdown for France and Germany and these moved in opposite directions; while the German flash manufacturing PMI was above 50 for the first time since June 2022, the French reading dipped back below the 50 threshold after two positive values around the turn of the year. For Germany, this trend came from stronger growth in output (which was at a 4-month high) and the strongest growth in new orders in almost 4 years. For France, although output growth eased, it remained positive and the main negative factor in their PMI was a fall in orders.
There are three Asian economies with a flash PMI reading and while they are all positive, the pace of this expansion accelerated in Japan and India but eased in Australia. The latter’s trend was also shared by the USA where the PMI reading fell back to its lowest level since last July while extending its run of positive numbers to 7 months.
Of the 7 countries and 1 region with a flash report, only France was indicating a contraction in activity. You can access all of these reports on the “PMI by S&P Global” website at https://www.pmi.spglobal.com/Public/Release/PressReleases or on request from MTA.