Flash Manufacturing PMI, April 2023: The flash Purchasing Managers’ Index (PMI) for the UK released this morning showed another fall in the reading for the manufacturing sector and, at 46.6, this is the weakest reading since last December. This is in marked contrast to the flash services figure which reached a 12-month high.
As with the fall in March, part of this is explained by shortening of suppliers’ delivery times but, of more concern is the fact that output slipped again in April, orders remain in negative territory and, with the improvement in supply chains, stocks of pre-production inventories were reduced.
We see a similar effect in the Euro-zone with services accelerating but manufacturing seeing a further fall in its PMI reading to 45.5 – this is the lowest for 35 months, at the low-point of the initial Covid outbreak. As in the UK, the output element of the calculation was also weaker than in March, although the movement for the Euro-zone is more significant as it went from being mildly positive to a modest negative figure. While this decline was helped by another fall in suppliers’ delivery times, orders were also negative in the Euro-zone in April and stocks of purchased inventories also fell.
For the flash readings, we only have data for France and Germany within the Euro-zone and while both countries saw the overall PMI at a 35-month low (45.5 and 44.0 respectively) with output weaker than in March, there are some nuanced differences. For Germany, although the output element slipped slightly from its March reading, it was still above 50 which suggests a slower rate of growth; however, for France, the output element plunged from an already weak level and was at its lowest since the height of the initial lockdowns. In Germany, the main driver of the lower PMI is a sharp and accelerated fall in stocks of purchases coupled with the improved lead times for deliveries from suppliers.
Elsewhere in the world, the flash Japanese manufacturing PMI improved slightly but at 49.5 it remains just below the turning point at 50; nonetheless, this is the best (or perhaps more accurately, least bad) reading since October 2022. The pace of decline in output fell slightly but the overall index was helped by a marked slowdown in the pace of decline for new orders.
Our publishing schedule means that we don’t yet have the US data but you can look this up and access all the PMI reports are available on the “PMI by S&P Global” website at https://www.pmi.spglobal.com/Public/Release/PressReleases or on request from MTA.
USMTO and CTMR, January 2023: The US Manufacturing Technology Orders (USMTO) programme tracks orders in the US market, based on the reports from participants. Over the first two months of 2023, total orders are running at -10.7% below the level in the same months (January & February) last year.
Although orders in February were down the same month last year, the 2023 reading is the 3rd highest ever for this month, so although down, it is certainly not a bad result. The survey press release from AMT notes that in 2023 an increasing share of the orders total is going to OEMs and industry-specific suppliers with the automotive and wider transport equipment industries (but not aerospace) and fabricated metal products suppliers having significantly increased their orders this year.
The regional analysis in the press release shows significant variations in the trends by region. Both the South-East (-50%) and West (-45%) regions were much lower than the opening months of 2022, the North-East (-1%) and North-Central-West (+3%) were broadly neutral and there was useful growth in the North-Central-East (+18%) and South-Central (+19%) areas.
The US Cutting Tool Market Report (CTMR) tracks the tooling business on a similar basis. This part of the manufacturing technology spectrum is very much on the up with consumption in the first two months of the year +20.1% higher than in January/February 2022. The 12-month rolling trend grew by +12% compared to the previous 12-month block. Although further growth is expected this year, the impact of inflation on this data is not clear and the US cutting tool market may not fully recover in volume terms.
You can download the press releases for the two surveys from the AMT web-site at www.amtonline.org/topic/intelligence, with the CTMR release also published on the USCTI web-site at www.uscti.com; alternatively, you can request either or both releases from MTA and we can make sure you get them when they are published each month.
European GDP, 4th Quarter 2022: The latest revision of GDP data for Europe, announced in a “statistics explained” document rather than the usual news release, has seen a further downgrading of the GDP data. Most significantly it is estimated to have fallen by -0.1% in both the EU and the Euro-zone compared to the 3rd quarter of the year – this is the same as in the previous estimate for the EU but is down from “no change” in Euro-zone GDP. The significance of this is that it raises the possibility of a recession given the usual definition of two consecutive quarters of negative growth.
Four of the EU countries – Czechia, Estonia, Finland and Hungary – are already in this situation having had a contraction in GDP in both the 3rd and 4th quarters of 2022 (Estonia has had a negative trend in all 4 quarters of 2022). There are then 6 other countries – Germany, Italy, Lithuania, Luxembourg, Poland and Sweden – where Q4 was negative, making the Q1 trend the key to whether or not they see an economic recession.
The strongest quarter-on-quarter growth in the final period of 2022 was in Greece (+1.4%) and Malta (+1.2%) while the largest decline was in Luxembourg (-3.8%) and Poland (-2.4%).
For more details, you can download the Eurostat Statistics Explained report from their website at https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Quarterly_national_accounts_-_GDP_and_employment.