CBI Industrial Trends Survey, September 2022:  The CBI Industrial Trends Survey (ITS) results continue to show a small fall in output in the 3 months to September (in practice, given the data collection dates, this is actually June, July and August) at broadly the same pace as in the previous month.  However, for the next three months, the respondents to the latest survey expect a much faster pace of decline in output – this trend has deteriorated in each of the last three surveys and is now at the weakest level since the three months to January 2021.

Output fell in 8 of the 17 sub-sectors in the CBI analysis and was led by the food & drink industries;  there is, however, a sliver of good news in that the main off-set to that decline came from the motor vehicles & transport equipment group which is, of course, far more important to our companies than the food & drink industries.

Total order books improved slightly from the previous survey and are now more or less stable following the small negative in the previous survey;  it is also worth noting that this is still a reasonable way above the long-run average, while the output indicators  are below their trend level.  Export orders remain below “normal” but again with a slight improvement compared to the “August” reading and above the long-run average for this measure.

Stocks of finished goods were seen as more than adequate, recording the highest balance since the February 2021 survey although, at +6, the balance is still below the long-run average (+12) for this question.  Average selling prices are expected to rise over the coming 3 months by a large majority of respondents and at broadly the same level as in the previous survey but lower than in the early part of the year.

You can get the Press Release of the CBI ITS from their web-site at www.cbi.org.uk/media-centre (21 September) or request it from MTA (we can also provide a summary of the results).


European Industrial Production, July 2022:  The latest data from Eurostat shows a sharp fall in industrial production with the seasonally adjusted index falling by -2.3% in the Euro-zone and a more modest but still significant -1.6% for the EU as a whole (this is in comparison with June 2022).  There has been an upward revision to the June figures but this only has a small impact and this fall wipes out the growth that was recorded in May and June for the Euro-zone but for the EU, the index is still a little higher than it was in April.

Looking back 12 months to July 2021, industrial production fell by -2.4% in the Euro-zone and by -0.8% for the EU.  Keeping with this comparison, of the 26 Member States who have published their July figures (Cyprus is again the missing element), 16 have recorded an increase and 10 a reduction in industrial production.  The fastest growth was in Bulgaria (+17.6%), Denmark (+12.0%) and Poland (+10.3%) and the largest reductions were in Ireland (-23.7%), Estonia and Slovakia (both -6.4%).  However, with Germany, France and Italy also seeing a reduction and only Spain among the larger Euro-zone countries having growth, it is easy to see why the Euro-zone has seen a larger impact than for the EU overall with non-Euro countries having the strongest growth.

Looking at the sub-sectors included in the Eurostat analysis, it is the capital goods industries that have led the way with the largest falls in all four of the comparisons in this report.  For the month-on-month trend, output of this group of industries (the most important for suppliers of manufacturing technology) fell by -3.2% for the EU and -4.2% for the Euro-zone.  On the comparison with June 2021, the reductions were -3.5% and -5.4% respectively.  Unfortunately, there is no further commentary that would point to which industries in this broad sub-sector have been hardest hit.

It is worth remembering that industrial production is dominated by manufacturing but it also includes output of the extraction industries (mining & quarrying) and utilities (supply of electricity, gas & water).

You can download the euro-indicators bulletin from the Eurostat website at https://ec.europa.eu/eurostat/news/euro-indicators (14 September) or request it from MTA.


Flash Purchasing Managers Index, September 2022:  With the Japanese figures not published until Monday and the US data out this afternoon, we only have the European and UK numbers to report for the flash Purchasing Managers’ Index (PMI) for the manufacturing sector.  For the UK, the news is mixed as although the overall PMI and the output element remain below the crucial 50 level, both are higher than in August – the flash manufacturing PMI now stands at 48.5, having been 47.3 in August and the fall in output, although slower than in August, is still significant.  It is worth noting that the flash service sector reading fell into negative territory to its lowest level for 20 months.

The weakness of production is mainly due to weak demand – orders fell at the 2nd fastest pace since May 2020 (the end of the initial phase of the pandemic) – but there are also reports that shortages of components, especially electronics, are still constraining output for some companies.  Export orders for manufacturers fell at the fastest rate for 28 months and the only bright spot is that employment in the sector picked up slightly, although the growth rate remains modest.

In the Euro-zone, the overall manufacturing PMI slipped further into negative territory at 48.5 (a 27-month low) with the output element falling again – in this case, to a 28-month low and now negative for 4 consecutive months.  New orders for manufacturing companies were also down sharply and order backlogs also fell;  this suggests that output is unlikely to recover in the short term.  Like the UK, there is some evidence that component shortages are restricting manufacturing output but there are also suggestions that energy market issues are limiting production capacity.  Supplier delivery times lengthened (compared to “normal”) to the least extent since October 2020 amid fewer reports of component shortages and improved logistics and shipping in some sectors.

At this stage, we only have separate reports for Germany and France which have a similar headline of the manufacturing PMI falling but for different reasons.  In Germany, there was an improvement in the output element of the calculation, although it still points to contraction, just not as rapidly as in either July or August.  In this case, orders were at their lowest since May 2020, with respondents increasingly hesitant as a result of the uncertain outlook with the influence of the war in Ukraine and higher energy costs weighing heavily on sentiment.

For France, the overall manufacturing PMI fell back into negative territory and is at its lowest level since May 2020 at the time of the initial Covid outbreak with the output element also falling to its lowest since that point.  Those businesses who are linked to the automotive and energy related industries attributed lower output to weak demand from their clients.

These 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, July 2022:  The US Manufacturing Technology Orders (USMTO) programme tracks orders in the US market, based on the reports from participants.  Orders in July were lower than in both June 2022 and a year ago (July 2021) but the total for the first seven months of 2022 is still +8.7% higher than the same period last year (January to July 2021).

However, given the exceptional months at the end of 2021, even with the boost from IMTS this year, it seems inevitable that 2022 will see a reduction from the all-time record that was achieved last year;  the prediction is that this year will turn out to be the 3rd best ever in the history of this survey.

The main driver of the fall in July was the transportation sector with declines being recorded for motor vehicle, railroad and shipping manufacturers – the exception here was aerospace where order values almost doubled compared to June.

The regional analysis divides into three groups – note that we have to use the data for metal cutting machine tools only for confidentiality reasons but as this accounts for almost all of the business recorded by the survey, this not too much of a problem.  Comparing the first seven months of the year with the same period in 2021, the South-Central (+35.4%) and South-East (+30.2%) regions are leading the way;  the next pair of regions which have more modest growth includes the West (+13.5%) and North-Central-East (+8.7%), while the North-East (-0.7%) and North-Central-West (-2.5%) are slightly down on last year already.

The US Cutting Tool Market Report (CTMR) tracks orders for tooling on a similar basis.  In the first seven months of 2022, business is up by +7.7% compared to the period from January to July 2021.  The 12-month rolling total for the cutting tool market is at its highest since July 2020 but we are yet to see any months reach the $200 million dollar mark that was the average monthly value during 2019.  There is no regional analysis in this report.

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.

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