The eurozone’s manufacturers are shrugging off fears about the impact of Britain’s vote to leave the European Union, and are enjoying “steady growth” in the face of the vote, according to the latest PMI data released by Markit on Monday morning.
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Here is an overlay with the equivalent PMI survey conducted by the Institute for Supply Management (see our full article on this series here).
In good news for the manufacturing sector, the AiG Performance of Manufacturing Index rose from 51.8 in June to 56.4 in July. Inventories of raw materials registered 49.5 percent, an increase of 1 percentage point from the June reading of 48.5 percent. The level of incoming new export orders in the United Kingdom manufacturing sector rose for the second successive month in July.
It is also odd that in times of labour shortage the employment index dropped under 50 points.
A score below the 50.0 baseline suggests contraction and above 50.0 points to growth.
Data on Friday showed that the region’s moderate recovery was fragile even before the British vote, with economic growth in the second quarter slowing to 0.3 percent from 0.6 percent in the previous three months.
Markit and CIPS’ PMI data on the state of the UK’s construction sector in July showed a reading of 45.9, which was actually substantially better than the 43.8 expected in July, but still represents the worst reading since the middle of 2009, and a further fall from June’s disastrous 46.0 reading. Five industries, including apparel and electrical equipment reported declines in new orders for the month. There was also another increase in lead times, with most of those surveyed by Markit blaming this on the recent port strikes. The rate of decline eased since June, but was still sharper than the average over the current 14-month period of contraction.
Weak domestic demand had a deadening effect in South Korea, where the Nikkei/Markit PMI fell to 50.1 in July, from 50.5. “Although output expanded at the fastest rate since March and backlog accumulation intensified, businesses refrained from creating jobs”, said Pollyanna De Lima, Economist, Markit and author of the report.
Of the 18 manufacturing industries, in July, the eight industries reporting employment growth – listed in order – are: Textile Mills; Printing & Related Support Activities; Nonmetallic Mineral Products; Furniture & Related Products; Miscellaneous Manufacturing; Chemical Products; Food, Beverage & Tobacco Products; and Fabricated Metal Products.
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There was some reprieve for the manufacturing industry as the slump in the value of the pound continued to help United Kingdom exports.
