GB: CIPS/PMI Manufacturing Index


Fri May 01 03:30:00 CDT 2015

Consensus Actual Previous Revised
Level 54.6 51.9 54.4 54.0

Highlights
Manufacturing activity continued to expand in April but at a significantly slower rate than at the end of last quarter. At a surprisingly soft 51.9 the headline PMI was 2.1 points short of its downwardly revised March reading and at a 7-month low.

Output saw its smallest rise since last November and much of this was limited to the consumer sector. New orders followed suit although subdued growth here was largely due to a fall in overseas demand as the domestic market remained relatively firm. Not for the first time, competitiveness loses caused by a strong exchange rate were a major issue. Even so, activity rates were still high enough to ensure a twenty-fourth successive increase in employment.

Input costs were down for an eighth consecutive month, again in part reflecting the buoyancy of the pound. As a result, factory gate charges declined for a fourth month in a row and the rate of output price deflation was the sharpest since September 2009.

Today's report suggests that UK manufacturing is cooling rather faster than generally expected. Domestic demand appears to be holding up quite well but clearly the overvalued exchange rate is taking its toll on the export community. At the same time, the strength of sterling is also contributing towards the significant undershoot of the BoE's 2 percent medium-term CPI target. Accordingly, a lower level of the pound would be welcomed by industry and policymakers alike and, coming just a few days ahead of next week's general election, the disappointing April PMI may well go some way to achieving just this.

Definition
The Markit PMI manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices.

Description
Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the ISM manufacturing index in the U.S. and the Markit PMIs elsewhere, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The Markit PMI manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices.