CBI Industrial Trends Survey, March 2022: Before we look at the latest results from the CBI Industrial Trends Survey (ITS) it is worth noting that although it is labelled as “March”, the data collection period ran from 24th February to 14th March. This means that although it is one of the first surveys to have been collected entirely in the context of Russia’s invasion of Ukraine, the data is really about February or the 3 months ending in February, so entirely before the start of the war.
Total order books strengthened in the latest data and the balance is close to its record high level that was recorded in November 2021. In part this was driven by export demand with order books for overseas markets above normal to their greatest extent since March 2019.
Manufacturing output in the latest 3 months continues to grow at a significant pace and at broadly the same level as in the period recorded in the February survey. Output increased in 10 of the 17 sub-sectors covered by the ITS with growth driven by the automotive and chemicals industries. The respondents to the survey expect a similar rate of growth in the coming 3 months – as this is forward looking, it suggests little impact from the Russia-Ukraine war in this first glimpse at sentiment.
The other forward looking question concerns manufacturers prices where expectations about price increases have accelerated again and set a new survey record high (this question was first asked in January 1975). This measure has been above its long-run average for some time but picked up sharply last October, had a further boost in the February survey before reaching the new high point in March.
Stocks of finished goods are still below their long-run average but continue to improve from the low point recorded in the December survey.
You can get the Press Release of the CBI ITS from their web-site at www.cbi.org.uk/media-centre (22 March) or request it from MTA (we can also provide a summary of the results).
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Flash Purchasing Managers Index, March 2022: The data collection period for the Purchasing Managers Index (PMI) was 11th to 22nd March, so is really the first measure we have of what has happened as a consequence of the Russia-Ukraine war. For the UK, the flash estimate of the overall manufacturing PMI fell to 55.5, its lowest level since February 2021; within the total, the output element also fell back from the February reading and is at its lowest for 5 months.
This lower rate of expansion for output was blamed on a combination of supply shortages and greater caution among customers while there were also reports that rising prices were starting to restrict demand. For the UK, we also saw new orders growing at their slowest pace in 13 months with softer demand and increased uncertainty blamed on the Russia-Ukraine conflict. Although suppliers delivery times the least negative since October 2020, respondents continued to note shortages of raw materials, staff shortages and shipping delays which is likely to be adversely affected by the war.
For the Euro-zone, we see a similar pattern with both the overall manufacturing PMI and the output element slipping compared to February while remaining firmly in positive territory. Output was the most affected with the reading of 53.6 being the lowest since last October and total new orders grew at their slowest pace since the end of the first lockdown in July 2020 as export orders actually fell for the first time in 21 months. The worst affected industry was automotive where output fell, while chemicals were flat.
Within the Euro-zone, we only have separate reports for Germany and France who both shared the experience of lower PMI and output readings. Beyond that, there are some subtle differences between the two countries, although both recorded a fall in new export orders. In Germany, there was another increase in order backlogs among manufacturers, with lead times for materials and components lengthening at their greatest extent for 4 months with firms reporting the influence of Covid-related shutdowns in China alongside the impact of the war in Ukraine. In France, the issues around the supply chain are more focused on availability and the war.
The only other flash PMI readings are in Japan and the USA. In Japan, the flash manufacturing PMI improved in March, mainly because output returned to positive territory with this element having been below the crucial 50 level in February; however, they also had a slower rate of growth for new orders and a negative position for export demand, coupled with a stronger lengthening of suppliers delivery times, most notably for semi-conductors.
In the USA, unlike Europe, the overall manufacturing PMI and the output element increased compared to their February readings and are at 6 and 7 month highs respectively. New orders also grew and the lengthening of order backlogs spurred an increase in employment as well, while costs of materials seems to be more prominent than supply or delivery issues.
These reports are available on the S&P Global (IHS Markit has been taken over) web-site at https://www.markiteconomics.com/Public/Release/PressReleases?language=en or on request from MTA.
US Manufacturing Technology Orders, January 2022: The US Manufacturing Technology Orders (USMTO) programme tracks orders in the US market, based on the reports from participants. In January 2022, orders for machine tools (despite the title, the published data only covers machine tools) were +33% higher than a year earlier and recorded the strongest start to the year since the survey began.
The 12-month rolling total to January 2022 increased to just over $6 billion which is +56% higher than in the period to January 2021 and +2% higher than in the 12 months to December 2021. The AMT press release points to a shift in the driver of demand away from consumers and towards industrial customers which, they suggest, points to supply chains being returned to the USA.
All of the 6 regions showed an improvement compared to January 2021; this was led by growth of +74% in the South-East and +60% in the North-Central-East down to single digit positive figures for the North-East (+9%) and the South-Central regions (+8%)
The release for the parallel survey for cutting tools has not yet been published but when it is you will be able to find it on the link below.
You can download the press release for the USMTO from the AMT web-site at www.amtonline.org/topic/intelligence or you can request it from MTA and we can make sure you get them when they are published each month.