PMI, UK and Euro-zone, April 2014: The Purchasing Managers Index (PMI) for the UK increased sharply to stand at 57.3 in April (55.8 in March). Manufacturing production continued its upward surge with growth spread across the major sectors of the economy as companies responded to rising new orders, new product launches and efforts to clear backlogs. The growth in orders was from both domestic and overseas markets, with North America, Europe, Asia and the Middle-East all highlighted as driving the increase in export orders.
The PMI reading for the euro-zone was 53.4, up a little from the March reading of 53.0; more notably, all 8 of the countries which are covered by this index were in positive territory for the first time since November 2007. The reading for Italy reached 54.0, its highest level for 3 years and Germany and Austria also saw an acceleration in the rate of improvement. Levels of output and new business increased across all 8 nations; domestic market conditions continued to stabilise and export orders posted a further increase, leading to the 7th consecutive month of growing order backlogs.
Elsewhere in the world, we don’t yet have data for China, Mexico, Brazil and Russia because of holidays and the timing of this article, but most of the other major economies saw PMI readings that were slightly down on the March level, but generally still positive or had a marginal increase. The exceptions to this trend were Japan which saw a fall to 49.4 (from 53.9 in March) which was blamed on an increase in the rate of sales tax, Australia where the index fell to 44.8 (from 47.9), Poland (52.0 compared to 54.0 in March) and the Czech Republic which joins the UK in being the only countries where April saw a significant acceleration (their index was 56.5, having been 55.5 in March)
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 2014: The Office for National Statistics (ONS) has released its preliminary estimate for activity in the UK economy at the start of 2014; it showed the UK economy expanded by +0.8% compared to the 4th quarter of 2013, making the economy +3.1% larger than it was a year earlier.
Three of the 4 major groupings in the economy expanded, with growth of +0.8% in production, +0.9% in services and +0.3% in construction; only agriculture showed a decline with a fall if -0.7%. These estimates are based on about 44% of the data that will eventually be available, so there is scope for some revisions, especially at the detailed level.
The ONS has also released the detailed industry estimates; this shows a fall of -3.0% in output for the Aerospace industry, but this seems to be mainly because of a very high figure at the end of 2013 as production is +4.8% higher than it was a year earlier. The automotive industry grew by +1.8% quarter-on-quarter and was +7.5% larger than a year earlier; for the machinery industry, the growth rates were +4.6% and +8.5% respectively (although caution is needed hear with some very strange figures in 2013, especially for the 1st quarter), while the metal products industry about half of which is cutting and forming sub-contractors) had growth of +0.2% and +1.6% respectively.
You can download the ONS Statistics Bulletin and the full dataset from their web-site at www.ons.gov.uk or request it from MTA.
CBI Industrial Trends Survey, April 2014: The latest quarterly survey from the CBI shows optimism and expectations for activity in the next few months among the strongest ever recorded. Manufacturers’ optimism was at its strongest pace since April 1973 and all but one of the 17 industrial sectors reported an improvement in sentiment - the exception was basic metals. Growth in total new orders was at its fastest since April 1995 and expectations for output growth are the best since July 1976.
There is more good news with investment intentions for spending on plant & machinery at its strongest since July 1997. By sector, the transport equipment sector (automotive, aerospace and other types of transport equipment) saw an improvement in optimism, with export optimism at its highest since 1984; investment intentions in this sector improved, but were below the highs of last year. For mechanical engineering, optimism was at its second highest ever level (since 1978) and positive for the 5th successive quarter; investment intentions for plant & machinery were at their highest for a year.
You can get more details of the CBI survey from their web-site at http://www.cbi.org.uk/business-issues/economic-intelligence/economic-int... or on request from MTA.
European Investment Rate and Profitability, 4th Quarter 2013: Eurostat data shows that the business investment rate (gross fixed capital formation divided by gross value added) for the euro-zone was 19.5%; this is up from the 3rd quarter figure of 19.2%, but the same as for the final period of 2012. For the EU28 as a whole, the investment rate was 19.4%, up from 19.1% on the previous quarter and the 19.2% at the end of 2012.
The business profit share (gross operating surplus divided by gross value added) for the EU28 as a whole was 37.4%, up from 37.1% in Q3 and 37.0% I the final period of 2012. For the euro-zone, the profit share was 37.8%, the same as the previous quarter, but up from the 37.4% at the end of 2012.
You can get the Eurostat News Release from their web-site at http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/ or request it from MTA.