PMI, UK and Euro-zone, December 2017: The Purchasing Managers Index (PMI) for the UK manufacturing sector fell slightly compared to November, but at 56.3 this is nothing to worry about (unlike one or two headline writers who simply demonstrated their ignorance!) as it still represents a strong rate of expansion for the sector. Output, new orders and employment all increased at a good pace and input cost inflation eased. Output growth accelerated in the investment goods sector, was at its strongest for intermediate goods, but the total was held back by weakness at producers of consumer goods.
The Euro-zone did even better with a small increase in the manufacturing PMI reading to 60.6 in December which is its highest level since the survey began in the middle of 1997. In this case, the expansion was led by the investment goods sub-sector - where most of our customers are classified - which also had a record high; as in the UK, it was the consumer goods sector that was weakest, although this is a relative term as it was still significantly positive. Despite the difficulties in appointing a new government following recent elections, Germany continues to lead the way with its PMI reading of 63.3 also a record high.
Elsewhere, we saw a mixture of higher and lower PMI readings compared to November, with both South Korea and the ASEAN region at 49.9, just below the crucial 50-point. The ASEAN region is quite a mix of trends, with Singapore the main constraint on the overall 7-country average. The other large fall was in Sweden, but as it was from 63.3 to 60.4, it is hard to suggest that this is really a problem. The strongest increases in the PMI in December were in India (up 2.1 points to 54.7) and Turkey (up 2.0 to 54.9), with Hungary, the Czech Republic and the USA all more than 1 point higher than the previous month.
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 or we have a summary report of charts which is available from MTA (contact Geoff Noon - firstname.lastname@example.org).
UK Quarterly National Accounts, 3rd Quarter 2017: Just before the Christmas break, the Office for National Statistics (ONS) released the detailed figures for the UK economy, along with revisions back to the start of 2016. The quarter-on-quarter trend for the 3rd quarter was unrevised at one decimal place from previous estimates at +0.4%, but because of the changes to earlier data (mainly the 2nd half of 2016), this now represents an annualised rate of +1.7% (the previous estimate was +1.5%).
It is also worth noting that UK economic growth in 2016 has been edged up to +1.9% (from +1.8%) as a result of these revisions.
The fastest growing sector of the economy was manufacturing at +1.3%, although because of the relative sizes, growth of +0.4% in services makes the largest impact. Construction contracted in the 3rd quarter by -0.5%, its second consecutive fall and, therefore, technically in recession.
You can get the ONS Statistical Bulletin from their web-site at www.ons.gov.uk or request it from MTA.
UK Business Investment, 3rd Quarter 2017: Alongside the National Accounts, the ONS have updated the preliminary estimate of investment - total business investment was +0.5% higher than in the 2nd quarter and +1.7% up compared to a year earlier; the 12-month rolling figures show growth of +2.2%.
There has been no change to the data by industry which was published at the end of November. Total manufacturing investment in the 3rd quarter was -4.4% down on the previous quarter, but +2.6% higher than in the same period of 2016 - the rolling 12-month trend is running at -0.8% because of the weak end to 2016. Within this figure, capital spending by the Engineering and Vehicles industries fell by -7.3% on the previous quarter, but was +6.0% higher than a year earlier, with the 12-month rate at -1.5%.
You can get the ONS Statistical Bulletin and access the more detailed data files from their web-site at www.ons.gov.uk or request it from MTA.
Bank of England Agents’ Summary of Business Conditions, 2017-Q4: The latest report from the Bank of England’s Agents showed that domestic manufacturing output had continued to grow relatively strongly and export volumes have strengthened, supported by an improving global economic outlook.
They report that capacity utilisation was broadly around normal, but that labour availability was the most likely factor to inhibit contacts ability to grow. Investment intentions remain modest, with reports of some manufacturers deferring or scaling back investment plans because of uncertainty about future trading arrangements with the European Union.
You can access the report, which also includes a summary of information from the Bank’s recently established Decision Maker Panel which is intended to complement the broader intelligence gathered from the Banks’ Agents, from the web-site at https://www.bankofengland.co.uk/agents-summary/2017/2017-q4 or on request from MTA.
CECIMO Statistical Toolbox, November/December 2017: The latest edition of the CECIMO Toolbox includes the usual round-up of macro-economic data for Europe including results from the latest Bank Lending Survey and the OECD Business Confidence Indicator. There is also the latest figure for MT-IX (CECIMO’s tracking of share prices for publicly quoted machine tool manufacturing companies around the world).
This toolbox reports on the latest results of CECIMO’s Barometer covering the 3rd quarter of 2017. This was broadly positive with confidence at its highest ever level and European machine tool builders (which is the coverage of CECIMO) expecting output and exports to increase. As a result, employment expectations were also at a high level.
You can download the CECIMO Toolbox from the CECIMO web-site at http://www.cecimo.eu/site/the-industry/data-statistics/statistical-toolbox/ or request it from MTA (if you wish, we can send this to you on a regular basis as it is released).