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Economic News

Purchasing Managers’ Index - flash readings for October:  The flash readings of the PMI for the UK, Euro-zone and USA showed a divergence in this month.  We will cover these in more detail next week with the final data being published on Monday/Tuesday but the Flash readings are based on about 80% of the final data and don’t often move significantly.

The flash manufacturing PMI for the UK suggests a slowing of growth with a reading of 53.3 (54.1 in October) while the estimate for the Euro-zone moved in the opposite direction in rising to 54.4 (from 53.7 in September).  In between these two trends was the USA where the flash manufacturing PMI for October was virtually unchanged at 53.3 (September 53.2).

If you want more details on any of the flash data or to get the final reports when they are released early next week, please go to the IHS Markit web-site at;  You can also request them from MTA – we will have our usual summary report next Friday.

European Commission Economic Sentiment Indicator and Capacity Utilisation, October 2020:  The European Commission (EC) draws from a range of surveys to construct confidence indicators for six sectors of the economy and then uses five of these (financial services is not included in the ESI) to compile its Economic Sentiment Indicator (ESI).  Because of the data collection periods, the month is that in which the data is published, although it really refers to the previous month - similarly, for the quarterly data, reference to Q4 is the publication date of figures that really relate to the levels, etc. in the 3rd period of the year.

The headline for “October” shows that the ESI in both the EU and the sub-set of the Euro-zone was unchanged compared to the previous month.  This brings the run of positive trends that started in May to an end;  hopefully this will prove to be a pause rather than a turning point, although with the Covid-19 infection rate increasing again and new lockdowns (of various intensities) being put into place, this is a hope rather than a prediction.

Looking at the various sectors, consumer confidence fell back and services confidence was also down slightly on the previous month, confidence improved in the retail trade industry and in construction.  The financial services sector confidence had the most significant decline compared to the previous month.

This is one of those rare occasions where industry was the most buoyant of the sectors in the report thanks to another marked improvement in the assessment of the current level of orders books and slightly more benign view of the stocks of finished goods which outweighed a downward movement in expectations for output levels in the next 3 months (effectively Q4-20).  Although not included in calculating confidence for the industry sector, it is worth noting that survey respondents reported increases in both output over the previous 3 months and in the level of export order books.

This was one of the quarterly surveys that gives the data for capacity utilisation.  The measures for the EU and the Euro-zone are similar and show that the recovery continued from the low point in the 2nd quarter but it has only recovered about two-thirds of the losses compared to the position at the end of 2019 (published as Q1-20).

Direct comparisons of levels between countries are not entirely valid but you can compare trends and relative levels.  Therefore, while the UK, Italy and France all saw capacity utilisation fall to a point much lower than in the financial crisis in 2008/09, the low point in the current cycle in Germany and Spain was a little above the trough in that earlier crisis.  For the first group of countries, the recovery in the UK is the slowest as while Italy and France are back above the 2008/09 low point (although nowhere near the 2019 levels), the UK has only recovered to the level we last saw in early-2009.

You can download the EC report from their web-site at or it can be requested from MTA - we can also provide summaries of the capacity utilisation data.