PMI, UK and Euro-zone, July 2014: The UK manufacturing Purchasing Managers Index (PMI) fell to 52.5 in August (from 54.8 in July); although this is the lowest reading since June 2013, it is still well into positive territory and indicates a good steady rate of expansion in activity in the sector. Both output and new orders expanded in August for the 18th successive month and the business is coming from both domestic and overseas markets. The upturn also remains broadly based with increases in the consumer, intermediate and investment goods sectors.
In the euro-zone, the index reading of 50.7 for August (July 2014 was 51.8) was the lowest since July 2013 as companies reported slower increases in total new orders and new export business. Most of the countries covered also reported a lower index, with Italy (49.8) slipping just below the crucial 50 mark that divides expansion and contraction for the first time in 14 months and France (46.9) registering a 15-month low; indeed, France was the only nation to report an outright decline in new orders in August.
Elsewhere in the world, the USA is the star with a PMI of 57.9 in August (July 55.8) and there was also a strongly positive number in Canada (54.8 in August); Mexico also had a good month with the PMI increasing to 52.1 and although Brazil only registered 50.2, this represents a turnaround from the July figure (49.1). In Asia, Korea saw a similar trend to Brazil with the index going from 49.3 in July to 50.3 in August, while the Chinese reading of 50.2 is disappointing as it is a fall from July (50.5); the star in this region was Taiwan with a reading of 56.1 in August - Japan (52.2) and India (52.4) both had a reasonably solid month. Poland was the only other country to have a contraction in August with the index falling to 49.0, while Turkey was in the turnaround club with the August index at 50.3 (48.5 in July); the Czech Republic saw the index at 54.3 and although this is a strong positive, it was, like the UK, down on the July figure (54.3).
All of the Markit PMI reports for major economies around the world, are available from their web-site at http://www.markiteconomics.com/Survey/Page.mvc/PressReleases. The figures from the American continent should be on-line from early afternoon.
CBI Industrial Trends Survey & European Business Climate Indicator, August 2014: The results from the latest CBI Survey show an easing in manufacturing output growth in the 3 months to August, although it remained firmly above average; note that like the PMI figures, this is slower growth and not slower activity - headline writers often use the term “slow-down” to imply a negative trend and this is not what we are seeing in these latest figures. Despite this, total order books strengthened, supporting a robust outlook for output growth over the coming 3 months; the strength in orders was spread widely across the manufacturing sector, with 16 of the 18 industry groups seeing order books above average levels.
The CBI survey forms an input to the European Commission’s Economic Sentiment Indicator (ESI); in August, the euro-zone ESI fell to 100.6 (102.1 in July) and that for the EU as a whole it fell to 104.6 (105.8 in July). Confidence in the manufacturing sector in the euro-zone fell as managers took a more careful view of expected levels of production; however, output in the past 3 months (which is not part of the confidence indicator) increased, as did export order books. The EU indicator fell by less than that for the euro-zone because the two largest non-euro economies, Poland and the UK, had a more moderate fall in the headline indicator.
You can get the CBI’s Press Release on the survey results from their web-site at http://www.cbi.org.uk/business-issues/economic-intelligence/economic-int... and the European Commission’s report is available from their web-site at http://ec.europa.eu/economy_finance/db_indicators/surveys/index_en.htm with both documents also available on request from MTA.
Bank of England Agents’ Summary of Business Conditions & Inflation Report, August 2014: The latest summary from the Bank of England’s Agents continues to point to steady growth in manufacturing output, although the pace of growth of export activity eased slightly. Responses to the question on investment intentions is still pointing to steady growth over the coming 12 months, although it was stronger in the service sector than in manufacturing where firms were concentrating more on realising the benefits of earlier spending; investment in the oil & gas sector was reported to have peaked in 2013 and exploration activity is now low. You can get the summary of the Agent’s Report from this link http://www.bankofengland.co.uk/publications/Documents/agentssummary/2014... or on request from MTA.
The Bank of England has also released its quarterly inflation report - source of the now famous fan charts. As well as discussing the outlook for inflation (which the MPC thinks is likely to be close to the target rate of +2.0% over the next couple of years, they also look at the prospects for economic growth. The MPC expect this to ease back from its current rate to close to the long-term trend level of 2½-2¾% through 2015 and 2016. The overview of the inflation report is available to download at http://www.bankofengland.co.uk/publications/Documents/inflationreport/20... or can also be requested from MTA.
CECIMO Statistical Toolbox, August 2014: The latest edition of the CECIMO Toolbox includes the usual round-up of economic information and CECIMO’s MT-IX, a tracker of share prices for machine tool companies which are publically quoted. This edition also includes the results of the latest CECIMO Barometer survey; this showed an increase in the net percentage of companies reporting a good business situation to +46% in July (from +23% in April), but expectations about demand, exports and employment all showed a downward trend.
You can download a copy of the Toolbox from CECIMO’s web-site at www.cecimo.eu or it can be requested from MTA.