UK and US manufacturing improves, Eurozone falls 

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Manufacturing warehouse
Manufacturing warehouse

UK: 

Conditions of the UK manufacturing sector saw a slight acceleration in the rate of improvement throughout November. 

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The IHS Markit/ CIPS Purchasing Managers’ Index (PMI) rose to 53.1, up from October’s 27-month low of 51.1.  

Despite this, the performance of the industry remained weak, with the reading still among the lowest registered over the past two and a half years.  

The trend in output strengthened slightly in November as new order intakes rose following October’s decline. The domestic market remained the prime source of new contract wins.  

Where an increase was reported, this was linked to new product launches and client stock-building. 

Output and new orders rose across the consumer, intermediate and investment goods sub-sectors.  

The level of new export businesses dropped for the second month in November, the first back-to-back contractions since early 2016. 

Firms state the declining client interest from overseas and ongoing Brexit uncertainties as the main factors for the decrease in foreign demand. Only the consumer goods industry saw an increase in new export business.  

Inflation of input costs and selling prices accelerated this month, remaining above their respective survey averages. However, price increases were mild compared to rates prevailing over the past two and a half years.  

Manufacturers linked higher output charges to rising input costs, which reflected higher commodity prices, ongoing exchange rates and shortages of certain raw materials.  

Average vendor performance continued to fall in November, as strained capacity at suppliers was further tested by an increase in purchasing activity. Manufacturers reported that input buying, and stocks of purchases were being raised to guard against ongoing Brexit and supply-chain uncertainties. 

 

US: 

The US manufacturing industry signalled a strong improvement in operating conditions across the US in November due to the fastest increase in new orders since May and an increase in employment.  

PMI fell slightly from 55.7 in October to 55.3 this month and is a three-month low. However, it showed a solid improvement in the sector and was above the series trend.  

Production rose in November and the rise in output was strong overall, even though it was joint-slowest in over a year.  

New orders increased at a sharp rate in November, due to the rise in new business being the fastest since May and improved client demand and product launches. Foreign demand also got better, with new export orders expanding at the fastest pace for nine-months.  

Manufacturing firms registered a strong growth in buying activity in response to higher quantities of new and unfinished work.  

Input purchases also rose due to concerns of further tariffs, and increased costs in raw material, due to supplier shortages.  

Cost burdens faced by goods producers rose again, and although the rate of inflation was slower than those earlier in the year, it remained marked. 

From this, businesses were able to partly pass greater cost burdens on to clients through higher output charges. 

While business confidence fell to the weakest since September 2017, and optimism stemmed from stronger demand, some firms raised concerns around the sustainability of the current sequence of new order growth.  

Eurozone: 

For the Eurozone, the PMI showed a continued fall of the single currency area’s manufacturing economy. 

Although it remained above the 50.0 mark for the 65th month, the final PMI result came in at 51.8 in November, down from 52.0 in October, and the lowest since August 2016.  

Capital goods producers registered net falls in both production and new work, although solid growth continued to be recorded. 

Export trade also fell for a third-month running, while cost pressures remained high.  

The Euro area’s ‘big-four’ economies posted the lowest manufacturing PMI readings of all countries covered by the survey in November. 

Italy recorded a second monthly fall in manufacturing operating conditions, registering its lowest PMI reading in nearly four years (48.6). France saw growth ease towards stagnation (50.8), while Germany saw its weakest expansion in over two and a half years (51.8).  

In contrast, Spain saw a slight improvement at 52.6, which is a three-month high, while the Netherlands continued to show the highest expansion at 56.1, although the pace of growth slipped to the lowest in 25-months.  

New orders and export trade both fell for the second successive month.  

Faltering demand was linked to challenging conditions in the auto industry which also impacted on output. Overall production on manufactured goods continued to rise during November, but only slightly and at the weakest pace in nearly five and a half years.  

Input prices continued to increase at a higher rate, despite inflation easing slightly since October. Price pressures remained acute in Germany and Austria compared to the weaker rises in Italy, Spain and Greece. 

Output charge inflation for the region as a whole remained at the above average rate, despite being the slowest recorded for 15 months.  

China: 

China’s PMI for November was 50.0, a decrease from October’s figure of 50.2. 

The main raw materials index came in at 47.4, an slight increase of from 47.2 in October, but lower than the threshold.

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