Oct 24, 2016 - Flash Eurozone Manufacturing PMI(3) at 53.3 ..... leader in critical information, analytics and expertise
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Purchasing Managers’ Index® MARKET SENSITIVE INFORMATION EMBARGOED UNTIL 1000 (CEST) / 0800 (UTC) October 24 2016
Markit Flash Eurozone PMI
®
Germany leads eurozone growth to strongest so far this year Key findings: (1) Flash Eurozone PMI Composite Output Index at 53.7 (52.6 in September). Ten-month high.
Flash Eurozone Services PMI Activity Index at 53.5 (52.2 in September). Nine-month high.
(2)
Flash Eurozone Manufacturing PMI Output (4) Index at 54.4 (53.8 in September). Ten-month high.
Markit Eurozone PMI and GDP Markit Eurozone Composite PMI 50 = no change
Eurostat Eurozone GDP Quarterly % change
65
1.5
60
1.0
55
0.5
50
0.0
45
-0.5
40
-1.0 GDP
35
Flash Eurozone Manufacturing PMI (52.6 in September). 30-month high.
(3)
at 53.3
25 1999
Data collected October 12-21
-2.0 -2.5 2001
2003
2005
2007
2009
2011
2013
2015
Sources: IHS Markit, Eurostat. GDP = gross domestic product
The pace of economic growth in the eurozone rose to the highest seen so far this year in October, led ® by a growth upturn in Germany, according to PMI survey data. Faster growth of orders books and an acceleration in the pace of hiring also augur well for the economy to continue to strengthen in coming months. Inflationary pressures meanwhile showed signs of picking up, with the survey recording the largest increase in prices charged for over five years. The Markit Eurozone PMI rose from 52.6 in September to 53.7 in October, signalling the fastest monthly increase in business activity since December of last year. New order growth was the highest since January, prompting firms to take on extra staff. Employment showed the biggest gain for three months. Despite the increase in headcounts, backlogs of work accumulated at the fastest rate since May 2011 as many firms struggled to keep pace with demand. With demand firming, companies were increasingly able to charge higher rates to customers. Average prices charged for goods and services rose for the Page 1 of 4
-1.5 PMI
30
first time since August 2015. Higher prices were often a reflection of the need to pass rising costs on to customers. Average input costs increased at the steepest rate for 15 months, linked mainly to higher commodity prices, notably oil-related, as well as rising wage costs. Growth of output picked up in both manufacturing and services to show the best gains seen since the turn of the year, with inflows of new orders and backlogs of unfinished work likewise rising at faster rates in both sectors. Manufacturers reported the steeper rates of increase, which also fed through to stronger employment growth. While hiring in the service sector merely ticked higher to remain close to September’s five-month low, payroll growth in the goods-producing sector climbed to the highest since May 2011. Germany led the expansion, with growth gaining significant momentum to show the second-largest monthly increase so far this year. Manufacturing enjoyed one of the largest upturns in production seen over the past two-and-a-half years, and service sector business activity surged higher,
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News Release
reviving from September’s slump to nearstagnation. Employment growth hit a five-year high, and the increased in average selling prices was the joint-largest seen over the past four-and-a-half years. By contrast, the pace of growth slowed in France, though was nevertheless the second-best seen over the past year. An upturn in factory output growth to a two-and-a-half-year high was countered by a slower rate of service sector expansion. Although total growth in new order inflows slowed and employment was trimmed back, backlogs of work jumped to the greatest extent since May 2011. Selling prices continued to fall, but even here there was some good news in that the rate of decline was the weakest for just over a year.
pressures, and the prospect of a robust fourth quarter will fuel further speculation of a possible tapering of QE purchases by the ECB. “Not only are average charges increasing at the steepest rate for just over five years, but October also saw the extent of manufacturing supply chain delays hit one of the highest in five years. Increasingly widespread delays suggest demand is outstripping supply for many goods, something which is usually soon followed by rising prices and investment in additional capacity.” -EndsCore v. Periphery PMI Output Indices Composite Output sa, 50 = no change on previous month 70 Germany
Elsewhere, output growth across the rest of the region revived from September’s 21-month low but remained one of the weakest expansions recorded over the past two years.
France
Rest of Eurozone
60
50
40
Source: IHS Markit
“The eurozone economy showed renewed signs of life at the start of the fourth quarter, enjoying its strongest expansion so far this year with the promise of more to come. With backlogs of work accumulating at the fastest rate for over five years, business activity growth and hiring look set to accelerate further as we head towards the end of the year.
Core v. Periphery PMI Employment Indices
“October’s PMI is consistent with a quarterly GDP growth rate of 0.4%, led by a 0.5% pace of expansion in Germany. Modest growth of 0.2-0.3% is being signalled for France, but there are various indicators which suggest that France will enjoy stronger growth in coming months, including a marked build-up of uncompleted work.
40
Composite Employment sa, 50 = no change on previous month 65 Germany
France
Rest of Eurozone
60 55 50
45
Source: IHS Markit
© IHS Markit 2016
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“Policymakers will be encouraged by signs of both stronger economic growth and rising price
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Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:
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Comment
News Release
Output
Summary of October data Output
Eurozone PMI - Output 65
Composite
Strongest rise in output since December 2015.
Services
Services expansion at ninemonth high.
55
Manufacturing
Output growth at ten-month high.
45
Composite
New business growth strengthens further.
Services
New business increases at fastest rate in six months.
Manufacturing
New order growth at fourmonth high.
Composite
Manufacturing
Services
60
50
40
Backlogs of Work Composite Services
35 2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
30 1998
New Orders
New business Eurozone PMI - New Business 65
Backlogs rise at strongest rate since May 2011.
Composite
Manufacturing
Services
60 55
50
Outstanding business increases for fifth month running.
45 40 35
Manufacturing
Backlogs rise at strongest rate since January 2014.
Composite
Jobs growth at three-month high.
Services
Further moderate rise in employment.
Manufacturing
Employment rises at fastest rate since May 2011.
60
Composite
Input price inflation at 15month high.
50
Services
Faster increase in costs than in September.
40
Manufacturing
Input prices rise for fourth month running.
Composite
Charges increase for first time since August 2015.
Services
Charges rise fractionally.
Eurozone PMI - Input Prices 90
Manufacturing
Output prices increase at strongest rate since June 2015.
80
Manufacturing
PMI rises to 53.3, from 52.6 in September.
60
30
Output Prices
PMI(3)
2016
2015
2014
2013
2012
2011
2010
2009
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2007
2006
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Employment Eurozone PMI - Employment 65
Composite
Manufacturing
Services
55
45
35 2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
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30 1998
Input Prices
1998
25
Employment
Input prices Composite
Manufacturing
Services
70
50 40 30 2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
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2004
2003
2002
2001
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20
Output prices Composite
Eurozone PMI - Output Prices 65
Manufacturing
Services
60 55
50 45
40 35
Source: IHS Markit.
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News Release
For further information, please contact: IHS Markit Chris Williamson, Chief Business Economist Telephone +44-20-7260-2329 Mobile +44-779-555-5061 Email
[email protected]
Rob Dobson, Senior Economist Telephone +44-1491-461-095 Mobile +44-782-691-3863 Email
[email protected]
Joanna Vickers, Corporate Communications Telephone +44207 260 2234 E-mail
[email protected] Note to Editors: Final October data are published on November 2 for manufacturing and November 4 for services and composite indicators. The Eurozone PMI® (Purchasing Managers' Index®) is produced by Markit and is based on original survey data collected from a representative panel of around 5,000 companies based in the euro area manufacturing and service sectors. National manufacturing data are included for Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece. National services data are included for Germany, France, Italy, Spain and the Republic of Ireland. The flash estimate is typically based on approximately 85%–90% of total PMI survey responses each month and is designed to provide an accurate advance indication of the final PMI data. The average differences between the flash and final PMI index values (final minus flash) since comparisons were first available in January 2006 are as follows (differences in absolute terms provide the better indication of true variation while average differences provide a better indication of any bias): Index Eurozone Composite Output Index1 Eurozone Manufacturing PMI3 Eurozone Services Business Activity Index2
Average difference 0.0 0.0 0.1
Average difference in absolute terms 0.2 0.2 0.3
The Purchasing Managers’ Index® (PMI®) survey methodology has developed an outstanding reputation for providing the most up-to-date possible indication of what is really happening in the private sector economy by tracking variables such as sales, employment, inventories and prices. The indices are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries (including the European Central Bank) use the data to help make interest rate decisions. PMI® surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies. Markit do not revise underlying survey data after first publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series. Historical data relating to the underlying (unadjusted) numbers, first published seasonally adjusted series and subsequently revised data are available to subscribers from Markit. Please contact
[email protected]. Notes 1. The Composite Output PMI is a weighted average of the Manufacturing Output Index and the Services Business Activity Index. 2. The Services Business Activity Index is the direct equivalent of the Manufacturing Output Index, based on the survey question “Is the level of business activity at your company higher, the same or lower than one month ago?” 3. The Manufacturing PMI is a composite index based on a weighted combination of the following five survey variables (weights shown in brackets): new orders (0.3); output (0.25); employment (0.2); suppliers’ delivery times (0.15); stocks of materials purchased (0.1). The delivery times index is inverted. 4. The Manufacturing Output Index is based on the survey question “Is the level of production/output at your company higher, the same or lower than one month ago?”
About IHS Markit (www.ihsmarkit.com) IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and expertise to forge solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 key business and government customers, including 85 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth. IHS Markit is a registered trademark of IHS Markit Ltd. All other company and product names may be trademarks of their respective owners © 2016 IHS Markit Ltd. All rights reserved. About PMI Purchasing Managers’ Index® (PMI®) surveys are now available for over 30 countries and also for key regions including the eurozone. They are the most closely-watched business surveys in the world, favoured by central banks, financial markets and business decision makers for their ability to provide up-to-date, accurate and often unique monthly indicators of economic trends. To learn more go to www.markit.com/product/pmi. The intellectual property rights to the Flash Eurozone PMI® provided herein are owned by or licensed to IHS Markit. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without IHS Markit’s prior consent. IHS Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall IHS Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers' Index ® and PMI® are either registered trade marks of Markit Economics Limited or licensed to Markit Economics Limited. IHS Markit is a registered trademark of IHS Markit Ltd. If you prefer not to receive news releases from IHS Markit, please email
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