GB: CIPS/PMI Manufacturing Index


Mon Nov 02 03:30:00 CST 2015

Consensus Actual Previous
Level 51.3 55.5 51.5

Highlights
UK manufacturing started the new quarter surprisingly strongly. A PMI reading of 55.5 was well above market expectations, up nearly 4 points versus a firmer revised September print and the best performance in some sixteen months. Indeed, the monthly increase in the index was one of the sharpest on record.

Both output and new orders recorded their steepest advances since the middle of 2014 and growth was widespread across the capital, consumer and intermediate goods sectors alike. Domestic demand was again dominant but new export business saw its first back-to-back rise since the third quarter of last year, reflecting strength outside of the other EU markets. Not unexpectedly therefore, employment expanded for a thirtieth successive month, notably amongst the larger scale producers.

Nonetheless, the buoyant picture described above failed to translate into any fresh inflation pressures. Rather, input costs fell again and at a rate close to September's 16-year record while factory gate prices were also trimmed.

Today's findings are surprisingly upbeat and significantly different from the much bleaker picture painted by the CBI Trends survey released just last week. This leaves a decidedly unclear outlook for UK manufacturing but, whichever survey turns out to be the more accurate, there is still unanimity over the lack of any inflation pressures in the sector. As such, while the pound should respond well to the report, gains are likely to be relatively limited.

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.