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PMI, UK and Euro-zone, June 2019:  There is very little good news in the manufacturing sector Purchasing Managers Index (PMI) data this month.  The UK index fell to 48.0 which is below the post-referendum dip from July 2016 and the weakest since February 2013.  Stock levels at both manufacturers and their clients, which were increased in anticipation of Brexit on 29th March, remain high and this has led to a scaling back of output and new orders, with both domestic and export demand weakening.  Although the intermediate goods industries seem to have borne the brunt of the stock-building activity, there was a sharp fall in new order intake for the investment goods industries.  Both of these sectors saw a loss of jobs in June.

The situation in the Euro-zone remains, if anything, worse than for the UK, with the PMI edging down again in June and, at 47.6, this was the 5th consecutive month where the index is below the crucial 50 level.  There are 8 countries in the calculation for the Euro-zone PMI and 5 of these were below 50, including Germany (45.0 - its best for 4 months, but still weak), Spain (47.9 - the lowest for over 6 years) and Italy (48.4 - negative for 9 months running);  the highest Euro-zone PMI reading in June was in Greece, although at 52.4 this was the weakest for 19 months.

Elsewhere in Europe the picture is similar;  the Czech Republic, Poland and Switzerland are all in negative territory, reflecting the strength of links of their manufacturing sector to Germany, although, perhaps surprisingly, Hungary is still quite a bit above 50, as is Sweden.  Turkey has seen a significant improvement in June, although it remains below 50 along with Russia which continues its decline from a mini-peak in March.

The picture in Asia is almost universally negative - only India is bucking this trend in the latest data - and the Americas is split with the USA and Brazil in positive territory while Canada and Mexico are negative.

Overall, of the 25 countries and 2 regions that wee monitor, only 8 countries are above 50 and thus indicating expansion of the manufacturing sector in June.  Also, there were only 6 countries where the PMI reading was higher than in May and two of those were by just 0.1 point (the smallest of margins).

The IHS Markit PMI reports for major economies around the world are available from their web-site at;  a chart report of the manufacturing PMIs prepared by MTA is available below.

UK National Accounts and Investment data, 1st Quarter 2019:  The Office for National Statistics (ONS) released the National Accounts for the 1st quarter right at the end of last week and this confirmed the quarter-on-quarter growth rate of +0.5% for the UK economy at the start of the year.  This is equivalent to an annualised growth rate of +1.8%.  However, as we have previously reported, a lot of this was to do with stock building in various parts of the manufacturing sector, most notably, the pharmaceuticals and food & drink industries.

The main element of new data that is of interest to MTA members was the detailed investment figures.  The headline shows that although total business investment was +0.4% (seasonally adjusted) higher than at the end of 2018, the level was -1.5% lower than a year earlier and the rolling 4-quarter trend was down by -1.3%.

Within the total, the picture for the manufacturing sector is somewhat weaker;  capital expenditure in the 1st quarter of 2019 was -0.3% lower than in the final period of 2018 but was -4.6% down on Q1-18 and the rolling 4-quarter trend is -4.0%.  Within the total, investment by the engineering & vehicles industries (taken together) was weaker still with trends of -5.1%, -2.2% and -4.8% respectively.  The seasonally adjusted total for capital expenditure for this group of industries was the lowest for 2 years at the start of 2019.

You can download the ONS Statistical Bulletins for the National Accounts and Business Investment from their web-site at (28 June) or request them  from MTA

European Commission Economic Sentiment Indicator, June 2019:  Following a pause in the downward trend in May, the European Commission’s (EC) Economic Sentiment Index fell sharply again in June in both the Euro-zone and the EU28.  Thanks mainly to Poland bucking the trend and with a little help from the UK, the EU28 fell less sharply than the Euro-zone.

Within the whole economy ESI, industrial confidence was the weakest element with a sharp fall being registered by then Euro-zone;  along with April, this was the sharpest monthly decline in 8 years and, for the first time since the Autumn of 2013, the confidence indicator is below its long-run average.  Managers views on three components of the industrial confidence indicator - production expectations, total order books and stocks of finished products - were more pessimistic.

Two other factors are also tracked by the EC survey, although they are not used for the measure of confidence.  There was a sharp fall in export order books - not surprising given that total orders were weak - but there is some encouragement in that the assessment of production over the previous 3 months was more positive.

You can download the EC report from their web-site at or request it from the MTA.

Euro-zone Investment and Profitability, 1st Quarter 2019:  Eurostat reports that the business investment rate (gross fixed capital formation divided by gross value added) was unchanged in the 1st quarter at 23.6% and, therefore, is still at its highest level since the 3rd quarter of 2008 (excluding a spike in 2015 that was caused by a one-off technical situation in Ireland).

This is encouraging given that the business profit share (gross operating surpluses divided by gross value added) fell again to stand at 39.8% at the start of 2019;  this was lower than in the previous quarter (revised to 40.0%) and a year earlier (40.7%).  This is the lowest level since the end of 2014

You can download the Eurostat News Release from their web-site at www. (03 July) or request it from MTA.

BEAMA Contract Price Adjustment Service:  Do you have long-term contracts, either with customers or suppliers?  Have you thought about incorporating something in the contract that allows you to adjust the price according to changes in input costs?

On behalf of members, MTA subscribe to a service provided by our colleagues at BEAMA which gives a monthly track of key indices on labour and materials costs.  Of course, you need to get the principle and the relevant formulas included in the contract, but this gives you a way of updating the relevant prices independently.

If you would like more details on this, please contact Geoff Noon ( at MTA;  we can send you a copy of the latest report and some typical formulae and can have a discussion about whether or not this would be useful for you.

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