Service Sector Growth slows but Manufacturing...

Service Sector growth slows in May but Manufacturing & Construction sectors see further marked growth in May, according to latest HIS Markit/CIPS PMI Survey.

Service  Sector

According to latest data from Markit/CIPS and reported in CIPS News; “May data highlighted a renewed slowdown in business activity growth across the UK service economy, following the four-month peak achieved in April. This partly reflected a softer pace of new order growth, which survey respondents linked to squeezed household budgets and, in some cases, delayed decision making among clients ahead of the General Election. There were positive developments in terms of cost pressures during May, with the latest survey pointing to the least marked rise in input prices since September 2016. This resulted in a moderation in output charge inflation from April’s near-nine year peak.

The headline seasonally adjusted IHS Markit/CIPS Services PMI® Business Activity Index registered 53.8 in May, to remain above the 50.0 no-change value for the tenth consecutive month. However, the index dropped from 55.8 in April and signalled the slowest expansion of service sector output since February. Anecdotal evidence from survey respondents mainly cited weaker new business growth in May.

Service providers indicated a further solid upturn in new business volumes, but the rate of expansion was the least marked for three months. The slowdown in new order growth was partly linked to short-term factors, particularly delays with decision making ahead of the election. However, survey respondents also commented on intense competition for new work amid squeezed consumer budgets. Some firms also noted that heightened economic uncertainty had acted as a brake on business-to-business sales growth in May.” See the full article in CIPS News

Manufacturing

UK manufacturing sees further marked growth in May, according to latest data from Markit/CIPS and reported in CIPS News

“The UK manufacturing sector remained resilient in May, sustaining most of the growth momentum gained during the prior survey month. At 56.7, the seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index® (PMI®) was only slightly below April’s three-year high of 57.3 and signalled an improvement in operating conditions for the tenth successive month.

Manufacturing production and new orders both expanded at above survey average rates. Companies benefited most from the continued strength of the domestic market. There was also a solid increase in new export business as well.

Overseas demand improved due to a combination of the historically weak sterling exchange rate and manufacturers’ efforts to promote and launch new products in foreign markets. The level of incoming new export orders rose for the thirteenth month in a row, with the rate of growth broadly in line with the average for that sequence.

Sector data indicated that solid expansions of production and new orders were seen across the consumer, intermediate and investment goods categories. Output growth was led by the intermediate goods sector, where the rate of increase accelerated to a four-month high. Growth moderated in the other two industries.

The ongoing expansion of the manufacturing sector had a positive impact on both business sentiment and job creation. Optimism regarding the outlook for production levels in one year’s time improved to a 20-month high, with 56% of manufacturers forecasting output to rise during the next 12 months. Positivity reflected company expansions, efforts to improve market share and marketing strategies.” See the full article in CIPS News

Construction

Construction growth rebounds to 17-month high in May, driven by house building, according to latest data from Markit/CIPS and reported in CIPS News

  • ·        Business activity rises at fastest pace since December 2015
  • ·        Residential work replaces civil engineering as best performing category
  • ·        Input cost inflation moderates to seven-month low

“UK construction companies experienced a sharp rebound in business activity during May, helped by the fastest upturn in residential work since the end of 2015. The latest survey also revealed a sustained recovery in new work, following the soft patch seen during the first quarter of 2017. Increased workloads encouraged greater staff recruitment and a marked expansion of input buying across the construction sector. Meanwhile, prices for imported materials continued to push up input costs during May. However, the overall rate of input price inflation eased further from the peak seen at the start of the year.

The seasonally adjusted IHS Markit/CIPS UK Construction Purchasing Managers’ Index® (PMI®) posted 56.0 in May, up sharply from 53.1 in April, to signal the strongest expansion of overall business activity for 17 months. While the headline index signalled robust growth momentum during May, the latest reading was still much weaker than the post-crisis peak seen in January 2014 (64.6).

A sharp and accelerated rise in residential work was a key factor supporting overall construction activity in May. The housing sub-category has rebounded strongly following the seven-month low seen in March. Moreover, the latest increase in residential building was the fastest since December 2015. Survey respondents cited a strong pipeline of new development projects and resilient underlying demand conditions.

May data also pointed to solid rises in civil engineering and commercial building. Although commercial development remained the weakest performing sub-category, the latest rise in activity was the fastest since March 2016.” See the full article in CIPS News

07.06.2017

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