Almost all of the flash manufacturing Purchasing Managers’ Index (PMI) readings for December were more negative, with Japan and India the most notable exceptions, although some improvement is hinted at in parts of the Euro-zone. The UK reading fell to its lowest level since January, with output recording a notable acceleration in the pace of decline.
The flash estimates for the Purchasing Managers’ Index (PMI) for manufacturing were released slightly earlier than usual with the holiday season approaching rapidly so there may be slightly more room for revisions than usual. However, that does not distract from the fact that the UK reading (47.3) was its weakest since January and the third negative in a row following the summer run of positive numbers.
There was a notable acceleration in the pace of decline in both output and new orders, with employment also down (although the latter was more marked in the service sector). Manufacturers also noted the strongest increase in the price of purchases (inputs) since January 2023, with rising transport costs and raw material prices adding to pressure from suppliers passing on higher employment costs after the budget.
At first glance the picture for the Euro-zone looks like it may have stabilised at a low level with the PMI of 45.2 unchanged from the November level. For the region overall, the output element of the calculation decelerated further compared to November and was at its weakest for a year but this was balanced by a slower rate of fall for orders. The positive spin is that bearing in mind the results for France and Germany (see below), an unchanged manufacturing PMI for the region means that there must have been an improvement in at least some of the other Euro-zone countries.
Only France and Germany have separate reports at the flash stage, so we will have to wait for the new year to find out where the improvement came from. Both of these countries saw their manufacturing PMI slip further into negative territory with readings of 41.9 and 42.5 respectively – for France, this is the lowest reading for 55 months (at the height of the initial Covid outbreak) with the output element at a similarly very low level.
In Asia, while there was a further deterioration in the reading for Australia (48.2), Japan saw its woes easing with the flash manufacturing PMI improving a little (49.5) while remaining below the 50 threshold. The only country with a flash PMI reading that is in positive territory is India (57.4) which saw the dip in November all but reversed this month with both output and new orders growing at a faster pace.
The flash picture is completed by the USA where the flash manufacturing PMI was at a 3-month low (48.3), thanks mainly to a 55-month low for the output element. The flash surveys are an amalgam of the manufacturing and services sector (although they still have separate PMI readings) and the US has the sharpest divergence between the sectors with very strong growth indicated by the service sector flash PMI.
These reports are available on the “PMI by S&P Global” website at https://www.pmi.spglobal.com/Public/Release/PressReleases or on request from MTA.