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ECONOMIC DATA THIS WEEK

PMI, UK and Euro-zone, April 2015:  The Purchasing Managers Index (PMI) for the UK which was published this morning showed a slowdown in the rate of expansion of the sector at 51.9, compared to the revised figures of 54.0 (it had been 54.4 when first published) for March.  It is interesting to note the sectoral pattern this month as this shows continued strong growth for consumer goods, but a sharp decline for intermediate goods which is affected mainly by the problems in the construction sector (see the next article on the UK GDP figures);  investment goods, which is the most important bit for manufacturing technology suppliers lies somewhere between the two with a slightly slower growth rate than in March, mainly as a result of competitiveness issues in Europe as a result of the weakness of the euro, but relatively strong domestic activity giving a fall in new orders, but continued growth in output, albeit at a slower pace.  There was modest growth in job creation for the consumer and investment goods sectors, mainly driven by increased workloads.

Because of the May Day holidays in Europe and much of Asia and the time differences which mean we won’t get the data from the Americas until this afternoon, the only other country for which the figures have been published are Japan;  this showed the PMI reading falling to 49.9, fractionally in negative territory as both new orders and output fell.

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, 1st Quarter 2015:  The Office for National Statistics (ONS) have released the preliminary estimate for the UK economy in the 1st quarter of the year;  this is based on about 44% of the data which will make up the final figures in a couple of months time, so there is scope for revision to the view that the UK economy was +0.3% larger than in the final period of 2014.  With publication of these figures, the UK economy is estimated to be +2.4% larger than it was 12 months earlier.

This attracted a number of comments in the media, partly because of the proximity to the General Election, but also because it was significantly lower than had been expected.  Although the service sector grew in the 1st quarter of 2015, the rate was at its slowest for 8 quarters, matching the rate recorded in the 2nd period of 2013.  However, there were rather more headlines around the continued fall in output for the construction sector (-1.6% down on the previous quarter) and in the production sector;  significantly for us, the latter was entirely due to a contraction in the mining & quarrying and water supply industries and manufacturing output was positive (just at only +0.1% compared to the previous quarter) - we will have to wait for the detailed industry figures in about 10 days time to see the outcome for the Engineering industries.

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, April 2015:  The latest CBI survey shows that total new orders growth over the past 3 months eased (as had been anticipated in the January survey), mainly as a result of weaker export business;  however, the rate of growth in output also fell and reached its lowest rate since January 2013.  Despite this, the prospects for the next 3 months look better with domestic orders expected to be firmer, expectations for export orders at their strongest for 3 quarts and output growth also expected to pick up.  The weakness in exports is undoubtedly driven by Sterling’s rise against the Euro, with firms reporting their 2nd largest ever drop in competiveness in Europe since 2000 and the number of firms citing price competition as a constraint on export orders only a shade below the record level recorded in January.

Although overall business sentiment was broadly flat, there was a sharp fall in investment intentions for plant & machinery, from the strong levels that we have seen in recent surveys;  the overall level of investment intentions remains at around its long-term average, but those for both the transport equipment and machinery industries are well below their own long-term trends.  Energy intensive industries such as chemicals and metal manufacture have done rather better with reporting of firm output and new orders growth, improved overall sentiment and strong and stable investment intentions.

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

CECIMO Toolbox, April 2015:  The latest edition of the CECIMO toolbox contains the usual round-up of data on the European economy including reports on interest rates, industrial production, industrial employment and the OECD business confidence indicator.  It also includes the latest reading of MT-IX - this is CECIMO’s own tracking of the share prices for publically quoted machine tool producing companies.

You can get the CECIMO toolbox from their web-site at www.cecimo.eu or on request from MTA.