GB: CIPS/PMI Manufacturing Index


Wed Jul 01 03:30:00 CDT 2015

Consensus Actual Previous Revised
Level 52.3 51.4 52.0 51.9

Highlights
Manufacturing activity slowed to 26-month low in June according the latest PMI survey. At 51.4, the headline index was down from a marginally weaker revised 51.9 in May to disappoint expectations for a modest acceleration at the end of the second quarter.

Consumer goods output continued to expand at a healthy rate but intermediates only stagnated and investment goods declined. Domestic demand remained relatively firm but weak overseas orders will underpin worries about the overvaluation of sterling. Headcount was up for a twenty-sixth successive month but the rate of job creation, while up fractionally from May's near-two-year low, remained below its average over the current growth period.

Input costs saw their first increase in ten months but the rate of input cost inflation was still only weak and soft enough to see output charges reduced for the fifth time in the last six months.

Today's PMI results paint a generally sluggish picture of UK manufacturing, particularly compared with the heady rates of growth seen over much of 2014. The sector is still expanding but the downshift in momentum points to a diminishing contribution to total output growth. Moreover, weak factory gate prices continue to argue in favour of subdued CPI inflation for some time yet. There is nothing here to put pressure on the BoE MPC to hike Bank Rate this year.

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.