Latest Economic Indicators from Markit/CIPS...
Latest indicators from Markit / CIPS are now available. We have summarised the main points for Services, Manufacturing and Construction sectors; please click on the link to go to the Markit / CIPS news bulletin.
Services Sector: Strongest rise in service sector activity so far in 2017. Business activity growth hits three-month high in March; new work increases at a strong pace, but job creation slows. Strongest prices charged inflation since September 2008.
The headline seasonally adjusted Markit/CIPS Services PMI® Business Activity Index picked up from 53.3 in February to 55.0 in March, and therefore above the 50.0 no-change value for the eighth consecutive month. Moreover, the latest reading signalled a marked increase in business activity and the fastest pace of expansion since December 2016. This signalled a marked rebound from the five-month low seen in February.
Stronger activity growth was linked to supportive UK economic conditions and greater client demand. Some companies continued to cite Brexit-related uncertainty as a factor holding back investment decisions. However, there were also reports that exchange rate depreciation had led to new sales enquiries from abroad and improved demand from overseas clients (especially the US).
Within the service sector, the worst performance so far this year has been seen in consumer-oriented sectors, notably hotels and restaurants, as well as personal consumer services (which include businesses such as sports centres, gyms and hairdressers). The greatest resilience has been seen in financial services. (Source Markit CIPS Services, April 2017)
Manufacturing Sector: Output and new order growth slow, but remain above long-term trends; price pressures remain elevated.
The performance of the UK manufacturing sector remained solid at the end of the first quarter. Although rates of expansion in output and new orders lost further impetus following recent highs, they remained above the respective long-run averages. The domestic market was a key source of new business wins. The boost to export competitiveness from the weak sterling exchange rate also contributed to new work inflows. The seasonally adjusted Markit/CIPS Purchasing Managers’ Index slipped to a four-month low of 54.2 in March, down from 54.5 in February, but stayed above the neutral mark of 50.0 for the eighth successive month. The latest PMI reading compared favourably to its long-run trend (51.6). The average over the opening quarter as a whole (54.7) was identical to the prior quarter’s near three-year high. March saw the rate of increase in manufacturing production ease to its weakest during the current eight-month sequence of expansion. Sector data suggested that the slowdown was centred on consumer goods producers, with the pace of output growth in that industry only modest. In contrast, the intermediate and investment goods sectors both registered substantial and accelerated rates of increase. (Source Markit CIPS Manufacturing, April 2017)
Construction Sector: Weaker housing activity growth weighs on UK construction sector. Business activity growth eases in March and housing slowdown offsets rebound in civil engineering and commercial work.
March data revealed a slowdown in growth across the UK construction sector, led by a weaker rise in residential building activity. The latest survey also pointed to only a marginal increase in new work, which contributed to slower employment growth and a slight decline in input buying. However, construction companies remain relatively upbeat about their near-term growth prospects, partly reflecting a stabilisation of client confidence from the post-referendum lows seen in 2016. Optimism regarding year-ahead business activity picked up in March to its second-highest since December 2015.
The seasonally adjusted Markit/CIPS UK Construction Purchasing Managers’ Index® (PMI®) dropped from 52.5 in February to 52.2 in March, to signal the joint-slowest upturn in overall construction output since the current period of expansion began in September 2016. Softer growth primarily reflected a loss of momentum in housing activity, which offset a rebound in both commercial and civil engineering activity. The latest increase in work on civil engineering projects was the fastest so far in 2017 and the strongest of the three sub-categories monitored by the survey in March. (Source Markit CIPS Construction, April 2017)