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ECONOMIC DATA THIS WEEK

PMI, UK and Euro-zone, March 2015:  The Purchasing Managers Index (PMI) for the UK showed another small improvement to 54.4 in March;  although this is not back to the very high levels we saw this time last year, this is certainly a very positive number and points to a continuing improvement in manufacturing output over the next few months.  Looking behind the headline, market report that manufacturing production expanded at its fastest rate for 9 months, underpinned by the steepest gain in new orders since July 2014;  although the strong domestic market mainly drove this growth, there was also a modest increase in export orders.

The euro-zone PMI also picked up in March, reaching 52.2, its highest level for 10 months;  despite this, there remain a couple of worries in the numbers.  Overall, production accelerated to a 10-month high in march, with the fastest growth in new orders over the same period and employment expanding at the fastest pace for 3½ years;  export orders were boosted by the weak euro which also contributed to lower input prices (which boosts the PMI reading).  Looking by country, the index in Germany (52.8) and Italy (53.3) were both at 11-month highs, but France (48.8), Greece (48.9) and Austria (47.7) all remain in negative territory; the latter is slightly puzzling as Austrian manufacturing usually does well if Germany is strong.

In Asia, Taiwan, Japan, China and Korea (we don’t yet have the Indian figures) were all lower than in February, although the first two did manage to stay above 50.  In Europe, Russia (48.1) and Turkey (48.0) both posted lower figures than the previous month, as did Poland (54.8 - although in this case it was still strongly positive) and the Czech Republic (56.1) even accelerated slightly;  these latter two trends make the Austrian figures seem even stranger as they are also heavily influenced by the German manufacturing sector.  There is also a contrast in the Americas, with the USA (55.7) accelerating, Mexico (53.8) also positive, Canada (48.9) stable and Brazil (46.2) sharply down on February.

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.

UK GDP, 4th Quarter 2014:  With the publication of the UK national accounts by the Office for National Statistics (ONS) , they have revised upwards the quarter-on-quarter growth rate for the economy to +0.6% and, with it, the growth rate for 2014 as a whole is also revised upwards to +2.8% (from +2.6% in the previous estimate).

The revised growth rates for the main sectors of the economy for 2014 as a whole are +2.9% for manufacturing, +3.0% for services, +7.4% for construction and +2.1% for agriculture;  the weak parts of the economy were mining and extraction (-0.6% lower than in 2013) and electricity & gas which was -5.5% lower than the previous year.

The next release of GDP data is due on 27th April, just a week or so before the election, when the ONS will announce its initial estimates for the 1st quarter of 2015 - these figures are likely to be watched very keenly!

You can get the ONS Statistical Bulletin from their web-site at www.ons.gov.uk or request it from MTA.

UK Business Investment, 4th Quarter 2014:  The ONS has also issued revised figures for business investment for the final period of 2014.  In the summary that follows in the next paragraph the two percentage changes quoted will be for the 4th quarter compared to the 3rd quarter of 2014, with the second figure being the percentage change for 2014 as a whole.

Total business investment fell by -1.4% on the quarter, but was +6.8% higher than in 2013, with the end of year dip being put down mainly to a fall in the oil and gas sector.  Within business overall, capital expenditure by the manufacturing sector grew by +2.1% and +6.4% respectively, with the Engineering and Vehicles sub-sector seeing growth of +7.6% and +6.0%;  the 4th quarter figure of £3.37 billion for this sector was the highest quarterly figure since the series began in 1998 and only the 3rd time it has been over £3 billion.

You can get the ONS Statistical Bulletin from their web-site at www.ons.gov.uk or request it from MTA.

CBI Industrial Trends Survey, March 2015:  The latest CBI survey shows that total orders remain robust, but there was a sharp weakening in export order books which fell to their lowest level since January 2013 and, worryingly, the 3 largest exporting sub-sectors - Motor Vehicles, Mechanical Engineering and Chemicals - all had order books below average in March.

The growth in output volumes eased a little compared to February, but the pace was still broadly in line with where it has been since the middle of 2014.  Despite this easing in the historical data, expectations for the coming 3 months remain at the good levels that were reported in February.  Motor vehicles was one of the main culprits in the slower growth in output, but the sector is still anticipating a rebound in the coming 3 months.

You can get the CBI News Release on this survey from their web-site at http://news.cbi.org.uk/news/manufacturing-growth-going-steady/ or request it from MTA.