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PURCHASING MANAGERS’ INDEX

Last year ended with the UK manufacturing Purchasing Managers Index (PMI) falling to its 2nd lowest level in 7½ years - with the reading at 47.5, it was just ahead of the 47.4 recorded in August 2019.  Output fell at its fastest pace since July 2012 as order intake fell from both domestic and overseas clients and companies reduced their pre-Brexit (31st October edition) stocks.  This fall in output was at its sharpest in the investment goods industries, although it was also down for intermediate goods with a small expansion for consumer goods.  Investment goods manufacturers also reported the sharpest fall in new orders in over a decade.  The pace of manufacturing employment, while negative, eased to its weakest pace since August.

The situation in the Euro-zone was equally gloomy with the PMI reading falling back to 46.3 in December meaning that it was in negative territory for the past 11 months.  With the exception of Austria where the PMI was unchanged from the November figure, all of the countries saw a fall in December.  Across the region, both new orders and output fell at accelerated rates compared to November.  As with the UK, the weakness appears to be in the investment and intermediate goods industries with a tiny amount of growth being registered for consumer goods.  Of the 8 Euro-zone countries covered, only Greece (53.9) and France (50.4) were in positive territory.

Elsewhere in Europe, the picture is more positive with significant increases in the manufacturing PMI for Russia, Sweden and Poland, although all three of these still have a reading below 50.  There was also an increase in Hungary - the only country in this group in positive territory - while the Czech Republic improved marginally (but still has the lowest PMI across the countries we cover) and Turkey was unchanged at 49.5.

In Asia, the trend was also generally positive with a significant improvement in the PMI reading in India, Taiwan and South Korea - in the case of the latter two countries, this moved them back in to positive territory.  The manufacturing PMI also improved in the ASEAN region although it still recorded its 7th consecutive negative balance.  There were small falls in the PMI for Japan (to 48.8) and China (to 51.5).

Finally, all of the countries in the Americas ended the year with a fall in their PMI reading.  Despite seeing the largest month-on-month fall, Brazil just managed to remain in positive territory, as did Canada and the USA, but Mexico only saw a further deterioration from the negative level it had registered in November.

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;  we have compiled a set of summary charts which is available to download below.

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