GB: CIPS/PMI Manufacturing Index


Mon Aug 03 03:30:00 CDT 2015

Consensus Actual Previous
Level 51.5 51.9 51.4

Highlights
UK manufacturing had only a moderately respectable July. At 51.9 the sector PMI was slightly stronger than expected and just 0.5 points higher than the 26-month low recorded in June.

Expansion was again led by the consumer goods subsector which helped to mask relatively soft performances by both investment goods and intermediates. Even then, new orders growth dropped to a 10-month trough as solid demand in the domestic market contrasted with a fourth successive decrease in exports. Backlogs were down for a seventeenth time in as many months and while employment was up for twenty-seventh straight month, the rise was less than the recent average.

Input costs resumed their downtrend but average factory gate prices rose, reflecting some sizeable hikes amongst larger companies. However, smaller and medium sized enterprises typically cut charges again.

July's results are not too different from those of the new CBI Trends survey which also painted a picture of worryingly lopsided and generally quite sluggish growth in manufacturing. The sector provisionally subtracted from second quarter GDP growth and while a positive impact looks likely in the current period, the early indications are that it will be only quite small. The strength of the pound remains a real problem. Accordingly, with inflation pressures in the sector still quite subdued, there is little here to justify any call for a near-term hike in Bank Rate.

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.