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PURCHASING MANAGERS’ INDEX

Because of the publishing schedule we don’t yet have the PMI’s for the Americas, or for India and the ASEAN region as these two are not published until next week.  As a result, the global manufacturing PMI is not complete, so we will focus on the data that we do have - in all cases this refers to the PMI for the manufacturing sector.

The UK PMI accelerated to its highest level for 10 years and optimism was at a 7-year high with the index at 58.9.  New orders from both domestic and export markets grew more rapidly and this drove a faster pace for output, while job growth was also at its highest for 7 years.  The growth in output was concentrated in the intermediate and investment goods sub-sectors, although consumer goods did return to positive territory for the first time in 3 months.  However, it has to be noted that part of the strength in the PMI reading is, as it has been for a while, the result of extended lead times because of supply chain and logistics issues related to both Covid-19 and Brexit - this has a perverse effect of increasing the index because it is seen as a sign of strong activity when in the current circumstances it should be a negative.

This was also a good month for the manufacturing sector in the Euro-zone although with the increasing lockdowns in some parts of Europe at the moment, this is an opportune moment to mention that the data collection period was from 12th to 24th March, so the full effect of the renewed restrictions may not yet be apparent in the PMI (62.5).  This strength was shared across the Euro-zone 8 countries that have a PMI series but was led by Germany (66.6) and the Netherlands (64.7) which both had all time record highs (the survey has been running for 24 years), while Italy (59.8) and France (59.3) were at their highest level in over 20 years.  This was under-pinned by record rises in both output and new orders, with the export element rising at a record pace.

We see a similar pattern in most of the rest of Europe but this is also where we find two countries where the PMI fell compared to the February reading.  There was a strong increase in Switzerland, which was already at a high level and more modest increases in Sweden, Czechia, Poland and Turkey.  The exceptions to the accelerating growth story were Russia which saw its PMI reading slip to 51.1 (51.5 in February) and Hungary (48.7) which slipped further into negative territory - indeed, among the countries that we have the March figures for at this stage, Hungary was the only one where the PMI reading was below the crucial 50 level.

As noted above, not all of the Asian data has been published yet, but in the figures we do have we see a much more muted story than in most of Europe.  Japan (52.7) did manage a modest increase on the February reading and Taiwan (60.8) edged up on an already strong level, but the PMI for South Korea (55.3) was unchanged on the previous month and China (50.3) edged down from a level that was already only showing a small amount of growth in manufacturing activity.

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 – this is not yet complete as noted above and we will update you with the missing data our report next week.

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