The April survey is broadly consistent with industrial production growing at a quarterly rate of 1%, rising close to 2% in Germany. Particularly welcome is the news that previously-struggling countries such as Spain and Italy are now also seeing robust growth, with the surveys indicating growth close to 1.0% in both cases.
The final seasonally adjusted Markit Eurozone Manufacturing PMI® rose to a three-month high of 53.4, up from March’s 53.0 and the flash estimate of 53.3. The PMI has signalled expansion for ten successive months. April saw a broadening of the recovery, with PMI readings for all of the nations for which data are collected above the 50.0 mark that divides expansion from contraction for the first time since November 2007.
Levels of output and new business also increased across all of the nations. Price pressures remained on the downside. Input costs fell at the fastest pace since July 2013, reflecting reports of successful price negotiations, competition among suppliers and lower prices for metals and food products. Output charges,
meanwhile, declined slightly for the second straight month.
Rates of improvement also accelerated in Germany, Italy and Austria, but eased in France, Spain and the Netherlands. Greece returned to growth.
Eurozone manufacturing production rose for the tenth successive month in April, with the rate of expansion the highest since January.
Underlying the accelerated increase in output was a further gain in new business, as domestic market conditions continued to stabilise and export orders posted a further increase. Although the rate of expansion in total new orders eased slightly, it remained above the average for the current ten-month sequence of growth.
Higher levels of new export business were reported in almost all of the nations covered, the exceptions being Greece (a decline) and Austria (no change). Where an increase was reported, this was linked to improving economic conditions in key markets such as the US and Asia.
The pace of new order growth tested capacity at a number of eurozone manufacturers, leading to an accumulation of backlogs of work for the seventh successive month in April. With both new business and outstanding work rising further, companies increased employment for the fourth straight month and at the fastest pace since August 2011.
Rates of job creation accelerated in Germany, Italy and Spain, and stabilised in Ireland and Austria. The Netherlands and Greece also reported slight increases to payroll numbers following declines in the prior survey month. A slight cut to headcounts was implemented in France, however, reversing the slight gain registered in March (which was the first rise in two years).
Month: May 2014
U.S. MANUFACTURING PMI AT 55 IN APRIL
The April PMI represents a good start to the second quarter. The upturn in manufacturing output and new orders signalled by the survey suggest that the economy should rebound after the disappointing 0.1% annualised GDP growth rate seen in the first three months of the year. However, although GDP may bounce back in the second quarter, the updated manufacturing numbers are not strong enough to offset the softer trend in the flash services PMI, suggesting that the underlying growth rate of the economy has weakened since late last year. (Chris Williamson, Markit’s Chief Economist)
U.S. manufacturers indicated a strong start to the second quarter of 2014, with output and new business volumes both rising sharply during April. Job creation continued, albeit at the slowest pace for three months, while input cost inflation moderated to its weakest since May 2013. Factory gate price inflation was the least marked for nine months.
At 55.4 in April, the final Markit U.S. Manufacturing PMI was little-changed from 55.5 in March and remained well above the 50.0 no-change value. The latest reading signalled an improvement in overall business conditions that matched the average for the first quarter of 2014 (55.4).
Faster expansions of production levels and incoming new work were the main positive influences on the headline PMI in April. Latest data signalled that output increased at the steepest pace since March 2011. Survey respondents commented that improving domestic economic conditions had been a key factor supporting production levels in April.
New order growth accelerated since March and was one of the fastest recorded over the past four years. April data pointed to only a modest contribution from export sales, although the latest expansion of incoming new work from abroad was the most marked since August 2013.
Increased production requirements contributed to a robust and accelerated expansion of input buying in April, with the latest increase the fastest since March 2012. Meanwhile, supplier performance deteriorated to the least marked degree since the current period of lengthening lead-times began in July 2013. A number of manufacturers noted that disruptions to delivery schedules had eased as a result of improved weather conditions.
Job growth was recorded for the tenth consecutive month in April. The latest survey pointed to a solid rise in employment numbers, although the pace of expansion eased slightly to its least marked since January. Manufacturers that added to their payroll numbers mostly cited increased client demand, while some also noted reduced pressures on operating margins.
Input cost inflation eased for the third time in the past four months during April. Softer input price pressures in turn contributed to a further moderation in output charge inflation at manufacturing firms.
April data indicated that large manufacturers (more than 500 employees) continued to record the steepest output growth of the three company size categories monitored by the survey. Large manufacturers also outperformed the wider manufacturing sector in terms of new export orders and job creation during the latest survey period.
All three market groups monitored by the survey posted higher levels of production in April. Intermediate goods producers again registered the fastest pace of output growth. For the first time in 2014 to date, new export orders increased in all three broad areas of the manufacturing sector, although in each case the pace of expansion was only marginal.
The ISM PMI:
The April PMI® registered 54.9 percent, an increase of 1.2 percentage points from March’s reading of 53.7 percent, indicating expansion in manufacturing for the 11th consecutive month. The New Orders Index registered 55.1 percent, equal to the reading in March, indicating growth in new orders for the 11th consecutive month. The Production Index registered 55.7 percent, slightly below the March reading of 55.9 percent. Employment grew for the 10th consecutive month, registering 54.7 percent, an increase of 3.6 percentage points over March’s reading of 51.1 percent. Comments from the panel generally remain positive; however, some expressed concern about international economic and political issues potentially impacting demand.
Of the 18 manufacturing industries, 17 are reporting growth in April in the following order: Apparel, Leather & Allied Products; Primary Metals; Furniture & Related Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Transportation Equipment; Fabricated Metal Products; Machinery; Printing & Related Support Activities; Plastics & Rubber Products; Textile Mills; Chemical Products; Computer & Electronic Products; Wood Products; Paper Products; Petroleum & Coal Products; and Electrical Equipment, Appliances & Components. The only industry reporting contraction in April is Nonmetallic Mineral Products.
ISM®‘s New Orders Index registered 55.1 percent in April, the same percentage as reported in March. ISM®‘s New Export Orders Index registered 57 percent in April, which is 1.5 percentage points higher than the 55.5 percent reported in March. April’s reading reflects growth in the level of exports for the 17th consecutive month.
ISM®‘s Backlog of Orders Index registered 55.5 percent in April, which is 2 percentage points lower than the 57.5 percent reported in March, indicating growth in order backlogs for the third consecutive month. Of the 88 percent of respondents who reported their backlog of orders, 26 percent reported greater backlogs, 15 percent reported smaller backlogs, and 59 percent reported no change from March.
