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PMI, UK and Euro-zone, September 2015:  The Purchasing Managers Index (PMI) for the UK was marginally lower than last month at 51.5 (51.6 in August), rounding off the weakest quarter in the past couple of years.  However, it remains in positive territory and it is now 2½ years since the index was below 50.  The best part of this composite index was a sharp fall in input prices, while the rest of the data is rather mixed;  although there was a pick-up in output growth, new order growth slipped to its weakest pace in a year and there was a marginal decrease in employment.  There was also a turnaround in the sub-sectors with consumer goods noticeably weaker, while intermediate goods and, most importantly for us, investment goods picked-up with the latter getting back above 50 for the first time in about 6 months.

The euro-zone overall also saw a small reduction in its PMI reading to 52.0 (52.3 in August), with only Austria, France and Greece having a higher index than in the previous month;  the most significant of these is France where the PMI was above 50 for the first time in 3 months.  Across the 8 countries, manufacturing production has been positive for 27 successive months and new orders also expanded, although both of these growth rates were a little slower than in August.

Elsewhere in the world a majority of the countries that we cover were in negative territory - i.e., their PMI readings were below 50 which implies contraction of the sector.  In Asia, both Japan and India had readings above 50, but both were below the level recorded in August for those countries, while in the Americas, it was only the USA that had a positive trend.  In non-euro-zone Europe, the PMI for the Czech Republic remains strong, although this was below the August level, and Poland was still above 50 as well, but Russia and Turkey were negative.

All of the Markit PMI reports for major economies around the world are available from their web-site at

UK National Accounts, 2nd Quarter 2015:  The Office for National Statistics (ONS) has released the quarterly National Accounts data and has confirmed that the current estimate for growth in the UK economy is +0.7% compared to the previous quarter (unrevised from its previous estimate).  However, this is now only +2.4% higher than a year earlier - revised down from +2.6% in the previous estimate.

This has largely come about because there has been a major revision to many economic data series that combine to generate the GDP figures;  this has been taken right back to 1997 which has led to a number of changes.  The peak to trough of the recession has been increased to -6.1% (formerly -6.0%), but the time taken to get back to the level of the economy in the 1st quarter of 2008 (the pre-recession peak) has been reduced by one quarter and is now estimated to have occurred in the 2nd quarter of 2013.

The main change to recent history is that the profile of the recovery has changed;  the initial period after the bottom of the recession is slightly weaker than before, but there is then stronger growth from 2011 to 2013.  This means that the growth rate for 2014 (compared to 2013) has been revised down slightly to +2.9% (from +3.0%), but the level is higher, hence the downward revision to the annualised rate for GDP in the 2nd quarter of 2015 because of the higher base level.

Among the other revisions, the UK’s overall trade deficit in the 2nd quarter has been revised down to just -3.6% of the UK economy;  this is the first time in two years that it has been below 5%.  The data shows that exports performed better than had been recorded previously, but it is slightly puzzling that given the relative strength of the UK economy, we don’t appear to have sucked in more imports (as would often be the case), especially in the context of the relative strength of Sterling vis-à-vis the Euro which is both our most important export market and the main source of imports.  The caveat has to be, however, that this most recent data could well get revised in future!

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

UK Investment, 2nd Quarter 2015:  Data on Investment is part of the National Accounts, so the ONS has also issued revised data on this topic.  Total business investment was estimated to have increased by +1.6% compared to the 1st quarter of the year and by +3.1% compared to a year earlier.

The revised figures also bring some more breakdowns of the investment data.  This shows that total manufacturing investment was +1.6% higher than in the previous quarter and that within this total, spending by the Engineering & Vehicles industry grew by +3.4%.  Looking back to a year earlier, total manufacturing investment was +20.0% higher than in the 2nd quarter of 2014, driven by significant jumps in both Q4-2014 (+8.0%) and Q1-2015 (+6.6%);  capital expenditure by the Engineering & Vehicles industry is +20.1% higher than a year earlier, although with a different profile to the manufacturing data, with the main quarter-on-quarter growth being in the final period of 2014.

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

European Commission Economic Sentiment Indicator (ESI), September 2015:  The European Commission (EC) takes a range of surveys, including for the UK the CBI Industrial Trends Survey (which we reported on last week), from across Europe to compile an overall trend for business activity.  The overall ESI for the euro-zone improved significantly (+1.5 points) compared to August and there was also an increase for the EU28 as a whole, although this was modest (only 0.6 points higher than the previous month).

In the euro-area, the improvement was driven by industrial and service sector confidence, with consumer confidence broadly unchanged; among the larger euro-area, the best improvement in the ESI was in Italy, with Germany also significantly better than in August.  Industrial confidence was driven by an uprating of managers expectations about production and, to a lesser extent, by an improvement in the current level of overall order books, although export order books edged down slightly (but this is not included in the assessment of confidence).

The overall figure for the whole of the EU28 was less than for the euro-area because the two largest economies, the UK and Poland, both saw a fall in their ESI;  the main difference from the euro-area economies appears to be a much weaker step-up in confidence in the service sector.

You can get the EC report from their web-site at (scroll down the page to open the 2015 links menu) or on request from MTA.