Chris Williamson Profile picture
Oct 22, 2021 14 tweets 5 min read Read on X
The IHS Markit/CIPS flash UK #PMI rose from 54.9 in Sep to 56.8 in Oct, indicating the fastest expansion of the economy since July.

That's above the pre-pandemic survey average of 54.0 and indicative of roughly 0.7% q/q #GDP growth.

bit.ly/3m3apw0
UK growth is looking increasingly lop-sided, however, with the upturn led by the services sector, and consumer-facing and hospitality firms in particular driving the expansion for a third month running. In contrast, manufacturing saw production growth slide to near-stagnation.
While the service sector continued to benefit from the opening up of the economy, factories have been besieged by a further worsening of supply chain delays and ongoing staffing issues, as well as falling exports and what appears to have been diversion of spend toward services.
Drilling down into the reasons provided by those manufacturers who reported a fall in production during October, some 43% reported that output had been hit by shortages of components or supply chain delays.
These shortages were highlighted by the UK survey’s suppliers’ delivery times index falling further in October, indicating the greatest lengthening of supply lines since the initial global factory closures seen at the start of the pandemic.
A further 15% of respondents reported that output had fallen due to staff shortages – linked either to illness, COVID-19 confinement or staff leaving.
Costs consequently rose further in October. The latest increase in costs was the largest since comparable data were first available in January 1998. Survey respondents often cited rising fuel, transport and energy bills, alongside steep price increases for items in short supply.
These higher costs will inevitably feed through into higher consumer prices. Have moderated to 3.1% in September, consumer price inflation looks set to rise markedly as we head towards the end of the year, given that the PMI price gauges tend to lead the official inflation data.
The record readings of the PMI survey’s price gauges will inevitably pour further fuel on inflation worries at the #BOE and add to the case for higher interest rates.
However, the economic growth signals from the PMI remain less convincing from a policy standpoint. The service sector is in something of a sweet spot as the UK has opened up its economy. Some of the growth momentum will therefore fade as this rebound passes.
Moreover, rising COVID-19 case numbers pose a downside risk to growth in the coming months, potentially deterring some services-oriented activity among consumers in particular and potentially leading to the renewed enforcement of health restrictions as winter draws in.
The recovery meanwhile faces headwinds from numerous other angles. It’s becoming increasingly evident that businesses will have to contend with disrupted supply chains and higher logistics costs for some time to come, as well as acute labour shortages and rising wage pressures.
UK households are meanwhile facing rising prices, including elevated energy and fuel costs, as well as impending tax increases and the end of several COVID-19 support measures.
It’s therefore clear that the resilience of the economy will be tested severely in the coming months, which suggests a strong risk that any imminent tightening of policy could quickly need to be reversed.

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More from @WilliamsonChris

Feb 21, 2023
UK business activity surged back into life in February, according to the flash PMI, displaying renewed growth after six months of decline. The composite PMI rose from 48.5 to 53.0, registering the strongest expansion since last June and smashing expectations of a reading of 49.2
UK PMI input cost gauges also fell further, but only slightly to remain elevated. So #CPI #inflation should continue to moderate, but the Bank of England's 2% target still seems a long way off
Here's the latest UK PMI data on output and prices charted against Bank of England #MPC policy decisions. Hard to see them taking a pause from tightening policy in March!
Read 4 tweets
Jan 24, 2023
UK #recession risk rises as flash #PMI falls deeper into contraction in January amid worsening service sector economy and ongoing manufacturing decline. More at bit.ly/3WzVTev
Survey highlights how headwinds are driving UK economic activity lower, though price pressures are thankfully cooling - albeit remaining elevated
Survey data also highlight how the #BoE policy tightening is having an impact. More rates hikes to come amid reduced government help to households and businesses will undoubtedly add to recession risks.
Read 4 tweets
Jan 4, 2023
Global #manufacturing output fell for a 5th straight month in December. Although improving supply helped moderate the rate of decline, a further steepening in the rate of loss of new orders paints a bleak picture of demand. More at bit.ly/3jSl9P9 #PMI
Factories around the world are now also shedding workers in response to worrying signs of excess operating capacity, according to @SPGlobalPMI data
@SPGlobalPMI Similarly, input buying by factories is slumping worldwide as firms adjust their inventories to lower demand and lower production requirements.
Read 4 tweets
Oct 4, 2022
Global #manufacturing PMI falls into contraction territory for first time since 2020 lockdowns.

Here's our deep dive into the numbers and sub-indices bit.ly/3RzsmPs
Of the 31 economies for which S&P Global PMI data are available for September, some 21 reported falling production. Myanmar and Taiwan are seeing the steepest downturns, followed by the Czech Republic and Poland.
Evidence of any substantial growth in production was largely confined to APAC, led by advances in Thailand, India, Indonesia and Vietnam.
Read 7 tweets
Jul 19, 2022
Worldwide PMIs to provide guidance on recession risks and inflation trends. Read our free preview of what to look out for in Friday's flash releases ihsmarkit.com/research-analy…
The key data will be the new orders indices, and what they are telling us about the environment in which central banks are hiking interest rates. It's not been looking great up to June ... Image
With forward-looking #PMI indicators such as business expectations, new orders and backlogs of work signalling worse is yet to come, euro area #GDP looks set to contract in the third quarter Image
Read 6 tweets
Jun 23, 2022
Flash #Germany #PMI Composite Output Index falls to 51.3 in June (May 53.7, consensus 53.1), a 6-month low and indicative of GDP contracting. As with France, consensus well and truly missed

More at bit.ly/3OhVVnF
Manufacturing Output Index at 49.0 (May: 51.2) amid steepest drop in factory orders for two years. Services PMI at 5-month low of 52.4 (May: 55.0) with demand also now falling.
German businesses also reported their lowest confidence towards future activity for over two years in June, led by worsening prospects in manufacturing. This points to a worsening economic decline in coming months
Read 5 tweets

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