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Economic Data This Week

PMI, UK and Euro-zone, May 2018:  The UK manufacturing sector Purchasing Managers Index (PMI) edged up slightly, triggering a round of “good news” headlines;  however, the detailed results are still something of a mixed bag.  The most important point is that despite falling from the peak we saw last November, the UK manufacturing PMI remains firmly in positive territory.  The improvement in the latest reading was generated by an acceleration of production, but this appears to have led to an increase of stocks of finished goods and a fall in backlogs, leading some to wonder about the real trend.  The pace of growth (but note, still growth!) in new orders eased to an 11-month low, while remaining at a reasonable level;  this is a combination of a softer increase from the domestic market and a slight improvement from overseas.

In the Euro-zone, the PMI is on a similar trend, although the May reading showed a further fall to a 15-month “low” - the last word is used cautiously because the reading of 55.5 still implies a very solid rate of expansion for activity in the sector and is well above the long-run average.  Among the countries covered, Ireland and France (and Greece) did a little better than in April, but the others saw a reduction in the pace of growth.  Although all three sub-sectors saw the PMI reading ease in May, the investment goods industries remained the strongest, while consumer goods had the lowest PMI.

Elsewhere in the world, there is a mixture of trends, although most of the countries we track saw their PMI reading lower than in April.  The most positive trends were in Hungary (up by 2.1 points to 55.4), Sweden (up 1.3 to 55.8) and Canada (up 0.7 to 56.2), although the highest reading is still in Switzerland at 62.4, although this was 1.2 points down on the April level.  The most concern is around those countries where the PMI is below 50 (which implies a contraction of their manufacturing industry);  Turkey (46.4) and Russia (49.8) both saw a significant decline compared to April, but South Korea, although only at 48.9, did record a better reading in May - also, although the PMI for Brazil was still just in positive territory at 50.7, it too had a large fall in the latest data.

The Markit PMI reports for major economies around the world are available from their web-site at or we have a summary report of charts which is available from MTA (contact Geoff Noon ).