PMI, UK and Euro-zone, November 2018: The Purchasing Managers Index (PMI) for the UK manufacturing sector picked up in November to 53.1; this suggests that the 27-month low recorded in October was something of an exception (probably related to the uncertainty over Brexit), although the improvement this month only bring the index in-line with the trend we have seen for this year. Compared to October, both output and orders increased across all the sub-sectors of consumer, intermediate and investment goods and there was also a modest increase in manufacturing employment following the fall in October.
In the Euro-zone, the overall PMI reading fell for the 4th consecutive month, although this was only a small reduction and it is still above the crucial 50 level (for the 65th month running). Of more concern is that IHS Markit - the compilers of the PMI series - note that the weakness in the Euro-zone was concentrated in the investment goods sub-sector; respondents here registered net falls in both output and new orders. At the country level, the PMI for Italy fell again (to 48.6, its lowest for 47 months) and although they are both still in positive territory, the next weakest readings were in the major economies of France (50.8 and a 26-month low) and Germany (51.8, 31-month low).
Elsewhere in the world, the picture is more mixed; there was a significant improvement (i.e. by at least 1 point) in Sweden (to 56.7), Brazil (to 52.7), Russia (to 52.8) and Canada (to 54.9), while Hungary (53.5), South Korea (slipping into negative territory at 48.6) and Mexico (also now just negative at 49.7) all had a significantly lower PMI than in October. This also shows that there is no real regional pattern to the trends with mixtures of higher and lower readings in Asia, Europe and the Americas. It is worth noting that in addition to the two countries already mentioned, Taiwan (48.4) and Turkey (44.7) also remain below the crucial 50 level.
The IHS 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).
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 (email@example.com) 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.
Economic Exchange from the CECIMO Autumn General Assembly: At the recent CECIMO meeting, there was the usual exchange of data for the machine tool sector in Europe (the 15 countries that are members of CECIMO - the European group for machine tool manufacturers associations). The headline shows that machine tool production grew by +7% in 2017 and a further growth of +8% is expected for 2018, taking the total to €27.8 billion.
The presentation and data files from this exchange, which includes global data as well as that for Europe on topics such as production, trade and consumption are available on request from MTA - contact Geoff Noon (e-mail firstname.lastname@example.org) for copies of the files.