Month: March 2014

At 57.1 in February, up from 53.7 in January, the final seasonally adjusted U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) signalled the strongest improvement in business conditions for 45 months. The headline index was much higher than the three-month low posted in January, and indicated a robust overall manufacturing sector performance. The earlier ‘flash’ reading for February was 56.7

February survey data signalled a strong upturn in manufacturing business conditions, following a weather-related slowdown during the previous month. Output and new business both picked up sharply as manufacturers started to overcome disruptions due to unusually bad weather, which in turn led to a solid rate of employment growth.

However, there were still strains on supply chains, with delivery times for inputs lengthening to the greatest degree since August 2008. As a result, some manufacturers have responded to recent weather disruptions by building up safety stocks, which was highlighted by the first increase in pre-production inventory levels since June 2013.

Volumes of new work increased at the sharpest rate since April 2010, which survey respondents mainly linked to rising domestic demand and strong confidence about the economic outlook among their clients. New export orders also increased and, although only marginal, the rate of expansion was the most marked since August 2013. Higher levels of incoming new business led to the steepest increase in manufacturing production since March 2011. Some manufacturers noted that unusually bad weather had a less disruptive impact on production growth than in the previous month, in part due to efforts to build up inventories of critical inputs at their plants.

Job creation was the strongest since March 2013, but this could not prevent a robust increase in backlogs at manufacturing firms. In a further sign of pressures on capacity, latest data indicated that stocks of finished goods fell for the eighth month in a row.

Meanwhile, manufacturers signalled a slower pace of input cost inflation during February, with the latest rise in input prices the weakest since June 2013. As a result, factory gate price inflation also eased further during the latest survey period.

February data signalled that large manufacturers (more than 500 employees) were the best performing of the three company size categories monitored by the survey. All company size groups recorded a sharper rate of new business growth in February, as well as rising levels of employment.

By market group, intermediate goods producers continued to register the strongest improvement in overall business conditions, followed by investment goods producers. Intermediate goods producers also posted the sharpest rise in new orders and the steepest pace of job creation.

At 53.2 in February, the final seasonally adjusted Markit Eurozone Manufacturing PMI® came in above the earlier flash estimate of 53.0. Although indicating a modest slowdown in the rate of expansion from January’s 32-month high, this still confirmed that the manufacturing recovery had completed its eighth successive month.

Growth was broad-based in February, with PMI readings for six out of the seven nations for which data were available signalling expansion (the Greek Manufacturing PMI is released on 4th March). The Netherlands rose back to the top of the PMI league table and, along with Ireland and Spain, was one of three nations to record a faster rate of expansion than in January. Germany and Austria remained among the strongest performers, despite seeing rates of improvement ease slightly over the month. Italy also continued its recovery, despite its PMI dipping to a three-month low. Although France remained at the foot of the table, there was brighter news on this front as well. The France Manufacturing PMI rose to a five-month  high of 49.7, up from the flash reading of 48.5, making it the main contributor to the gain between the flash and final eurozone PMI.

Eurozone manufacturing output, new orders and new export business all rose for the eighth successive month in February. Rates of expansion also remained solid in all three cases, despite losing some impetus compared to the prior month.

All seven of the nations for which February data were available reported higher levels of production and new export orders. France was the only one of those nations to see a drop in total new orders, although the pace of contraction was weaker than signalled by the earlier flash estimate.

The outlook for eurozone manufacturing production also remained positive, with backlogs of work rising for the fifth straight month and stocks of finished goods showing a further decline. Improved demand and increased levels of work-in-hand encouraged further jobs growth, with employment rising for the second successive month in February.

The pace of increase in payroll numbers remained only modest, however, and was weaker than in the previous month. Rates of job creation accelerated in Ireland (four-month high), Spain (six-and-a-half-year record) and Austria (11-month high), but eased marginally in Germany and Italy. Employment returned to growth in the Netherlands, but declined in France.

On the price front, inflationary pressures continued to subside in February. Average input costs declined slightly for the first time in six months, reflecting (in part) lower energy prices. Input costs fell in Germany and France, but rose in Italy, Spain, the Netherlands, Austria and Ireland. Meanwhile, average output charges rose only marginally and at the weakest pace since last October. A number of firms indicated that they were still facing strong competition. The big-three nations of Germany, France and Italy all reported higher selling prices, as did Austria.