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ECONOMIC DATA THIS WEEK

PMI, UK and Euro-zone, April 2013:  The Purchasing Managers Index (PMI) picked up a little in April, but at 49.8 (it had been 48.6 in March), it is still below the crucial 50 level that marks the border between expansion (above 50) and contraction (below 50) in the sector.  There was a modest increase in orders, with export business improving from the Americas, the Middle East and Australia and a small improvement in production volumes;  the growth in output was concentrated mainly in investment and consumer goods sectors.  Manufacturing jobs fell again with cuts in the Intermediate goods industries more than outweighing growth elsewhere in the sector.

In contrast, the picture in almost all of Europe was generally gloomy with the Euro-zone manufacturing PMI coming in at 46.7 (46.8 in March).  The “best” performance came from the Netherlands at 48.2, closely followed by Germany at 48.1, although the latter represents a 40-month low for them.  The PMI for Italy, Spain and France all improved from the March level, but at 45.5, 44.7 and 44.4 respectively, they are all well into negative territory.

The two exceptions in Europe are Turkey and Russia which although having lower PMI readings than in march, were still showing growth at 51.3 and 50.6 respectively.  The Markit series for the USA (there is also a longer running, independent series for the USA) showed a fall from 54.6 in March to 52.1 in April;  elsewhere in the Americas, the index for Canada was 50.1 (49.3 in March) and Brazil was at 50.8 (51.8).  Most of the Asian economies are also in positive territory, ranging from 50.4 in China (down from 51.6) to 52.6 (52.0) in Korea;  Taiwan at 50.7 (51.2) and India at 51.0 (54.2) also saw a decrease from the March, while Japan saw an improvement to 51.1 (50.4).

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.

European Investment and Profitability, 4th Quarter 2012:  Eurostat has released its summary of the European Economic Accounts for the final period of 2012 which shows that the business investment rate (defined as gross fixed capital formation divided by gross value added, expressed as a percentage) for the euro-zone fell to 19.7% from 20.0% in the 3rd quarter;  it was also down on the level at the end of 2011 when the ratio had been 20.5%.  This is the lowest level since the 1st quarter of 2010 which was the trough of the recession.  In the EU27 as a whole, the investment ratio was 19.6%, again the lowest level since the recession.

In the euro-zone, the business profit share (defined as gross operating surplus divided by gross value added) was 37.7%, compared with 38.0% in the previous quarter and 38.4% in the final period of 2011.  For the EU27 as a whole, the profit share was 37.3%, down from 37.6% in the 3rd period of 2012 and 38.0% at the end of 2011.

Full details can be found in the Eurostat News Release which can be downloaded from their web-site at http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/ or requested from MTA.