The IHS Markit/CIPS flash UK composite Purchasing Managers’ Index® shows a Manufacturing sub-sector reading of 49.8 for January, up from December’s 47.5 final reading and only slightly below the 50 no-change mark.
The manufacturing output reading increased from 45.6 in December to 49.5 in the flash January report. The flash data is calculated on 80-90% of the responses from some 650 manufacturers. The survey indicated a broad stabilisation of business conditions in UK manufacturing with higher levels of new work and a slight rise in employment. Manufacturing production fell at a much slower pace than in December, with the latest reduction only marginal and the smallest since the current phase of decline began in June 2019. Lower output was linked to a lack of pressure on operating capacity and, in some cases, the ability to fulfil orders from inventories accumulated to deal with Brexit uncertainty. There was, however, a sharp and accelerated fall in stocks of purchases.
The overall composite PMI including services recorded a sixteen month high, rising from December’s 49.3 contraction level to a growth reading of 52.4 for January.
The equivalent January flash composite PMI for the Eurozone shows manufacturing contracting at a slower pace. The manufacturing output PMI read 47.5, improving from December’s 46.1. The overall manufacturing PMI reading improved to 47.8 from 46.3. The ongoing muted pace of output growth, says Markit, reflected lack of momentum in new order inflows, with new business improving but only marginally. Export, including intra-zone trade, also recovered slightly. Future looking sentiment from manufacturers improved for the fifth successive month, reflecting signs that respondents believe the worst of the downturn may have passed.