The first reading of the manufacturing Purchasing Managers Index (PMI) for 2020 showed an improvement in the UK which recorded exactly 50; this is right on the border between expansion and contraction and the first time is has not been negative since April 2019. The news release from IHS Markit (who compile the PMI data) suggests that this stabilisation comes as political uncertainty has eased following the General Election. There was a mild recovery in new orders, although new export business levels fell for the 3rd month running. There is some concern in that while output overall stabilised, this was the product of expansions for the consumer and intermediate goods sub-sectors but a continued sharp fall in output (and orders) for investment goods where most of our customers sit.
The Euro-zone also saw a marked improvement with the PMI reading also at its highest since April 2019 but this is still signalling a decline with the reading at 47.9. All of the countries included in the aggregate for the Euro-zone saw an improvement and Ireland joined France and Greece in being above 50; however, the German PMI of 45.3, although better than any month since February 2019, still points to a significant contraction of the sector. In Germany, order books and output fell more slowly but the pace of decline in employment remains among the fastest recorded since early in 2010.
Elsewhere in Europe, Sweden and Turkey moved back above 50 - in the latter case for the first time since March 2018 - and the reading for the Czech Republic and Russia also improved while remaining below 50. Poland and Switzerland both saw their already negative readings worsen further in January.
There was a similarly mixed picture in Asia; India was the star of the whole world in January with their PMI increasing to 55.3 and Taiwan (51.8) also saw an improvement in their already positive position. Japan edged up from the December level but at 48.8 remains negative and while South Korea and the ASEAN region both had readings of an almost neutral 49.8, the former was slightly down on the previous month but the latter was very slightly up. China, at 51.1, while positive, was at its weakest since August 2019, but we can expect to see a sharp deterioration in February when the impact of the Corona Virus will impact the data.
In the Americas, although there was a strong improvement in the PMI reading in Mexico, it remains negative at 49.0. Brazil, at 51.0, also saw a better figure in January and the Canadian PMI reading edged up to 50.6; while the USA was the only country in this region to see a fall in its PMI reading, at 51.9, it is still the best of the four.
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.