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PMI, UK and Euro-zone, June 2017:  The Purchasing Managers Index (PMI) for the UK manufacturing sector fell again to stand at 54.3 in June (56.3 in May) and many of the headlines picked up on this trend.  However, this is slightly misleading because this reading still implies a healthy level of growth for the manufacturing sector and it remains significantly above the long-run average.  Both production and new orders grew, although at a slower pace than in May, and price pressures continued to ease as input inflation down from the highs seen at the start of the year.

In contrast, there was a small improvement in the Euro-zone PMI which, at 57.4 (57.0 in May), was at its highest level for 74 months.  Austria (60.7) set a 76-month record and both Germany (59.6) and Netherlands (58.6) were at 74-month highs;  the laggards in this survey were Italy (55.2), France (54.8) and Spain (54.7) but they are, like the UK, still at a high level.  Mention should also be made of Greece which recorded a PMI of 50.5, its first positive number since August 2016.

This leads neatly to note that of the 25 countries and 2 regions (Euro-zone and ASEAN) that we look at, none were in negative territory, although the PMI for the ASEAN region was right on the border at 50.0.  There was a mixture of rising and falling indices with the most improved and also the strongest PMI’s being Sweden (62.4) and Switzerland (60.1), with the largest decline compared to May being in Hungary (57.2 - which is still a very good level) and Russia (down to 50.3).

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

UK Business Investment, 1st Quarter 2017:  With publication of the revised data by the Office for National Statistics (ONS) we now have some information at an industry level;  regular readers will recall that there was a sharp fall in manufacturing and engineering investment in the 4th quarter of 2016 and although the latest figures are an improvement (+2.1% for manufacturing and +6.4% for Engineering and Vehicles), the overall levels are still very low.

This is evidenced by the rolling 12-month average trend (Q2-16 to Q1-17 compared with Q2-15 to Q1-16) which shows that manufacturing investment fell by -9.6% while the trend for capital spending by the Engineering & Vehicles industry shows a fall of -16.7%.

There were no revisions to any of the earlier data in this release and as the investment data is often amended, we may see some changes when the Blue Book is published at the end of September, but the evidence of a sharp downturn, rather than a one-off glitch, is growing.

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

UK National Accounts, 1st Quarter 2017:  The revised investment data came in the context of the quarterly National Accounts which showed no changes in the growth rates for the UK economy compared to the previous estimate issued a month earlier.  Therefore, these stand at a quarter-on-quarter increase of +0.2%, with the economy +2.0% higher than a year earlier.

Within the economy overall, manufacturing did slightly better with increases of +0.3% and +2.5% respectively.  The other main sectors of the economy also grew compared to the final period of 2016, but with services (which accounts for more than ¾ of the economy) only +0.1% higher, the pace of growth in the economy slowed.

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

Investment and Profitability in the Euro-zone, 1st Quarter 2017:  Data from Eurostat shows a fall in the business investment rate (measured as gross fixed capital formation divided by gross value added) in the Euro-zone which stood at 22.2% compared to 23.6% at the end of 2016, but the earlier figure was distorted by transactions from outside the EU into Ireland, so a more valid comparison is with the rate of 22.0% in both the 3rd and 1st quarters of 2016.  Excluding this exceptional figure, the rate in the 1st quarter of 2017 is the highest since the 2nd period of 2012.

This release also includes information on the business profit share (gross operating surplus divided by gross value added) which fell to 40.3%;  this compares with 40.8% in the previous quarter and 40.7% a year earlier.  There are no significant distortions in this data, so the latest figure is genuinely the lowest since the last quarter of 2014.

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

BEAMA Contract Price Adjustment Service:  if 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.