Mood dampened as PMI for manufacturing falls to eight-month low - EY ITEM

1 April 2014

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  • PMI for manufacturing falls to eight-month low
  • Weaker investment and exports are slightly concerning
  • But the overall picture for manufacturing remains bright

Martin Beck senior economic adviser to the EY ITEM Club, comments on the latest PMI manufacturing figures:

“Today’s PMI for manufacturing, which hit an eight-month low, is somewhat disappointing, particularly when we look at the finer details. A moderation in both export demand and output of investment goods suggest the recovery is still heavily dependent on the consumer. This has slightly dampened the mood following the latest set of national accounts, which showed some broadening out of activity beyond the consumer. Adverse exchange rate movements are likely to have contributed to the softening of export demand.

“The overall story is positive however. Today’s underwhelming number falls against a backdrop of very strong PMI numbers in recent months. The sector is still performing well above its historical average, and will contribute towards positive GDP growth in Q1.

“Lower energy and commodity prices are enabling firms to leave prices unchanged, which should help to keep domestic inflation under wraps. The sector also continues to soak up workers, suggesting sustained optimism about the economic outlook. Rising employment will support both household spending power and consumer confidence, helping to drive consumer spending over the coming months.”