GB: CIPS/PMI Manufacturing Index


Mon Jan 04 03:30:00 CST 2016

Consensus Actual Previous Revised
Level 52.8 51.9 52.7 52.5

Highlights
Manufacturing disappointed in December. At 51.9, the sector PMI was down 0.6 points from a slightly lower revised November reading to signal a sluggish end to the year for UK goods production.

Output and new orders continued to rise but at slower rates than in November with the consumer goods subsector again making the dominant contribution. New export orders advanced for a fourth consecutive month but at their weakest rate since September. Employment increased for the thirtieth time in the last thirty-two months and, while only modestly, by enough to accommodate a reduction in backlogs.

Input costs fell again on the back of declines in global commodity prices and some of this was passed on in lower output prices. However, the rate of deflation was only marginal and the least marked of the current 4-month sequence.

Today's report continues the pattern of slowing growth and weak inflation seen over much of 2015 and suggests that manufacturing will not provide much of a boost to UK GDP growth this quarter. Accordingly, if Bank Rate is to be hiked any time soon (which seems unlikely), service sector activity will need to pick-up sharply.

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.