The latest set of purchasing managers’ indices showed that global manufacturing looked good in most major zones, apart from China.
In China, the official PMI slipped to 50.3 in February, down from 51.3 in January. Forecasts from economists had expected 51.2 in February, so this slowdown was surprising. Indeed, it puts China just above the growth threshold of 50.
However, it can be partly explained by a slowdown in manufacturing in the run-up to and during the Chinese New Year festival as demand fell.
But worryingly for China, new orders from the export market also fell back.
While remaining very strong at 55.2 in February, UK manufacturing fell to an eight-month low from 55.3 in January.
The IHS Markit/CIPS UK Manufacturing PMI has shown gradual decline in UK manufacturing growth since the 51-month high in November, but it shouldn’t be forgotten that growth remains robust.
Production in the UK was at the slowest pace for 11 months, but new orders improved with this growth coming from domestic sources, while export new order remained solid.
UK manufacturers though reported higher input costs with commodities costing them extra. They were able to pass on these costs though by charging higher prices for finished goods.
The IHS Markit Eurozone Manufacturing PMI fell in February to 58.6 from 59.6 in January, but it still remains outstandingly strong in terms of manufacturing growth.
Even though output and new orders eased, this still remains one of the best periods for eurozone manufacturing in 18 years.
The Netherlands had a record high with 63.4, followed by a four-month low from Germany with a still very big 60.6, Austria had a nine-month low of 59.2, Italy was next with 56.8, Ireland 56.2 (four-month low), Greece 56.1 (212-month high), Spain 56.0 (three-month high) and France was last with 55.9 – a six-month low.
Eurozone manufacturers reported that the cost of buying raw materials was slightly lower in February compared to January, but still remained high. However, they were able to increase the price of output goods.
US manufacturing was close to a three-year peak, according to the IHS Markit US Manufacturing PMI.
It was at 55.3 in February, down a touch on January’s 34-month high of 55.5.
New business improved for US manufacturers in February, reaching a 13-month high, with much of this coming from domestic sources. Export demand remained good though.
However, due to high prices, US manufacturers preferred to use existing stocks of raw materials, rather than purchase new product.