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PURCHASING MANAGERS INDEX FOR MANUFACTURING

The Global Purchasing Managers’ Index (PMI) for manufacturing produced by J P Morgan using the data from IHS Markit edged up to 56.0 in May - this is its highest level since April 2010 and was spread across the consumer, intermediate and investment goods sectors.  Of the countries covered by the global summary, the six strongest PMI readings were all in Europe.

One of those was the UK where the PMI stood at 65.6 giving us a positive reading for 12 consecutive months.  While this was not quite as high as the Flash estimate that we reported a couple of weeks ago, this is still a new record high for the UK manufacturing PMI (the survey started in the UK in 1992).  Output improved at the 3rd fastest pace recorded but, encouragingly, new orders were at an all-time high with business improving both domestically and for exports.  However, part of the story is the perverse effect of lengthening delivery times for suppliers caused input shortages (electronics, plastics and metals), transport delays and higher demand for raw materials.

It is a similar story in the Euro-zone which also set a new record high of 63.1 (the Euro-zone series goes back to 1997).  While all thee sectors had a good month, the IHS Markit report notes that investment goods was the strongest in terms of both output and new orders.  Among the countries, Germany saw its reading edge down from the April level, although at 64.4 it remains very strong while the other 7 Euro-zone countries that are covered all saw an improvement in their PMI compared to the April reading.

Elsewhere in Europe the picture is a little more mixed;  the Czech Republic, Poland and Switzerland all saw an increase in their already strong manufacturing PMI compared to April and while Sweden saw a small reduction, like Germany, it is also still at a high level.  Hungary and Russia also saw their more modest positive PMI readings improve from the May level but Turkey dipped back into negative territory for the first time in 12 months.

Most of the Asian countries that we cover saw a small fall in their PMI reading for May - the exceptions were India which had a more substantial reduction from 55.5 in April to 50.8 in May as the Coronavirus outbreak there took hold and China where the reading ticked up to 52.0.

Finally, in the Americas we have four different situations.  The USA saw a further increase in its already strong PMI to stand at 62.1 while a similarly sized improvement in Brazil only took their index to 53.7;  Canada saw its PMI fall a little but it remains relatively strong at 57.0 while Mexico also saw a fall but this only sent is back deeper in to negative territory at 47.6 (the lowest among the countries/regions that we cover), thus ending a 4-month run of successively less negative readings.

Having mentioned the lowest reading in May, the highest was the 69.4 recorded in the Netherlands.  Compared to April, the largest changes were India with a fall of 4.7 points and the UK which was up by the same amount.

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 and our summary charts report is available to download below.

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