The January CIPS/Markit UK Services PMI figures, released today, show:
- The headline seasonally adjusted Business Activity Index fell to 54.5, from December’s 56.8, signalling the slowest rise in activity for five months.
- Slowdown of activity was attributed by many panellists to the weather. Latest data showed that Hotels and Restaurants suffered the steepest falls in both activity and new business.
- Growth in new business eased to slowest rate since August. Growth was strongest in Business Services.
- Employment fell for a twenty-first successive month in January as natural wastage and the non-replacement of leavers was used to trim employee numbers. However, there was also some evidence that jobs were cut in response to excess capacity as backlogs continued to fall in January, albeit at a slight pace.
- Business expectations were at their highest for four months in January with hopes of general economic improvement and planned new product launches given as supporting optimism. Potential government spending cuts were noted as a factor that may depress activity over the coming year.
Paul Smith, Senior Economist at Markit Economics said:
“The heavy snow appears to have hit services harder than manufacturing in January. Whereas manufacturers were often able to make up for lost production days, service providers – especially consumer-facing firms – simply saw fewer customers. However, the fact that services activity continued to increase despite the weather, combined with the surge in manufacturing reported earlier this week, suggests that the UK economy continued its recovery at the start of 2010. What’s more, an improvement in expectations for the year ahead and reduced job losses both point to ongoing expansion in coming months”.
The CIPS/Markit UK Services PMI covers transport & communication, financial intermediation, business services, personal services, computing & IT and hotels & restaurants.
Release: Markit Economics [PDF].
Note: The index is a “diffusion index”, it is calculated by adding together the percentage of respondents that reported an improvement plus half of the percentage that reported no change. Results will vary around the 50.0 “no-change” level. Readings above 50.0 signal an improvement, readings below 50.0 a deterioration. The greater the divergence from 50.0, the greater the rate of change anticipated by respondents.
Posted in Economy.
Tagged with business, employment, jobs, service sector.
By Samuel
– 3 February, 2010
According to the latest seasonally adjusted CIPS/Markit Construction Purchasing Managers’ Index (PMI®), released today:
- The headline number was 48.6 in January, up from 47.1 in December. A figure below 50 indicates contraction. HOwever, the January figure represented the smallest decline in activity since the 23-month contraction commenced.
- The level of incoming new orders decreased for the second consecutive month in January. Although only moderate, the pace of contraction accelerated to the sharpest since last June with subdued confidence, funding constraints and competitive pressures also acting as a drag on new workloads.
- Sub-contracting declined on the month, in line with the trend starting December 2007. The availability of sub-contractors was reported to have improved, whilst the rates they charged fell at a faster pace.
- The quantity of building materials purchased by UK constructors fell for a twenty-third successive month in January and was the sharpest drop since May 2009. Anecdotal evidence suggested that many firms had opted to deplete their existing inventories before ordering new stock.
- Input prices fell for the first time since September 2009, amid reports that a number of suppliers had cut their charges in response to competitive pressures.
- Around 60% of firms anticipate growth over the next 12 months. Improving economic conditions, planned marketing campaigns and the restarting of projects previously put on hold all being cited as reasons for positive expectations.
David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said:
“Construction continues to be the worst performing sector of the UK economy – struggling in the face of credit supply shortages and overall economic uncertainty. Purchasing managers said the widespread chaos caused by the snow in January didn’t help an already fragile industry with new orders disappointingly low.
“Though the rate of decline slowed, competition is still intense. Operating conditions are tough and firms are now measuring performance from such a low base level that there’s a general consensus things can’t get much worse. Particularly disappointing is the slowdown in house building as this has been one of the few bright spots in recent months.”
Press Release: Markit Economics [PDF].
Note: The index is a “diffusion index”, it is calculated by adding together the percentage of respondents that reported an improvement plus half of the percentage that reported no change. Results will vary around the 50.0 “no-change” level. Readings above 50.0 signal an improvement, readings below 50.0 a deterioration. The greater the divergence from 50.0, the greater the rate of change anticipated by respondents.
Posted in Economy.
Tagged with civil engineering, commercial building, construction, contraction, Residential.
By Samuel
– 2 February, 2010
The latest seasonally adjusted CIPS/Markit Manufacturing Purchasing Managers’ Index® (PMI®), was released today.
The headline PMI® provides a single figure indication of operating conditions in the manufacturing sector. The index is calculated using data collected on new orders, production, employment, supplier performance and stocks of purchases.
- Growth of output at 43-month high. New orders rose at steepest pace for six years.
- Employment increased slightly for first time since April 2008. However, some sectors reported ongoing redundancy programmes, particularly the basic metals and mechanical engineering sub-industries.
- Average purchasing costs increased at the fastest rate since September 2008, driven higher by rising commodity prices and compunded by low stock levels at suppliers.
- Vendor performance suffered the sharpest deterioration for 39 months with average charges rising at the fastest pace since October 2008, as companies moved to protect operating margins. However, the rate of increase in selling prices was well below that signalled for costs.
Rob Dobson, Senior Economist at Markit Economics commented:
“The main driver of growth was a surge in new export orders, as improving global market conditions and the ongoing weakness of sterling led to the sharpest rise in foreign demand recorded in at least 14 years.
“The survey therefore raises hopes that the sluggish recovery from recession signalled by GDP data in the final quarter of last year”.
David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, added:
“Inevitably, though, purchasing managers voiced some notes of caution. The spike in purchasing activity was attributed to inflationary concerns and delivery delays – rather than increased client demand. Also, the highly competitive nature of this still fragile market meant firms shied away from raising their selling prices to a sufficient extent to fully cover cost increases”.
Press Release: Markit Economics [PDF]
Note: The index is a “diffusion index”. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change. An index reading above 50 indicates an overall increase in that variable, below 50 an overall decrease.
The CIPS/Markit UK Manufacturing Purchasing Managers’ Index® (PMI®) is a composite index based on five of the individual indexes with the following weights: New Orders – 0.3, Output – 0.25, Employment – 0.2, Suppliers’ Delivery Times – 0.15, Stock of Items Purchased – 0.1, with the Delivery Times Index inverted so that it moves in a comparable direction.
Posted in Economy.
Tagged with manufacturing.
By Samuel
– 1 February, 2010
According to the latest edition of the BRC-KPMG Retail Sales Monitor, which covers the period of November 29th 2009 to January 2nd 2010, released today:
- UK retail sales values rose 4.2% on a like-for-like basis from December 2008, when sales had contracted 3.3% due to turmoil in financial markets hitting consumer confidence. On a total basis, sales rose 6.0%, against a 1.4% decline in December 2008.
- The three-month weighted average saw food sales rising 2.6% on a like-for-like basis and 4.4% on a total sales basis, compared to the same period in 2008. Food sales growth picked up to its strongest since June, partly reflecting higher food price inflation.
- The three-month weighted average of non-food sales grew 3.8% on a like-for-like basis and 6.0% on a total sales basis, compared to the same period 2008. Wintry weather boosted clothing and footwear whilst health and beauty picked up, helped by Christmas gifting. Homewares sales showed further gains but against larger declines a year ago. However, furniture slowed.
- Non-food non-store sales (internet, mail-order and phone sales) in December were 26.5% higher than a year ago, compared with a 16.9% increase in November. Some benefited from shoppers buying online when snow prevented them getting out.
Commenting on the figures Helen Dickinson, Head of Retail at KPMG, said,
“Christmas really provided an opportunity for strong retailers to ’strut their stuff’ and, although the stream of trading updates has only just started, we will see a pronounced polarisation between retailers who got the proposition right and those that did not. However, the results are flattered by the impact of higher shop prices, given the reductions made in December 2008 following the VAT cut. But, despite this and despite the weather, the consumer demonstrated a strong desire to spend. All sectors, with the exception of furniture and flooring for which the upward trend of recent months slowed, performed well. December’s results also showed the growing importance of post-Christmas trading but, given the economic outlook, they are unlikely to be indicative of the trend for the rest of the year”.
Data: British Retail Consortium [PDF].
Note: The BRC-KPMG Retail Sales Monitor measures changes in the actual value (including VAT) of retail sales from a sample of retailers. The Monitor measures the value of spending and doesn’t adjust for price changes. In the case of price inflation, sales volumes will increase by less than sales values. During periods of price deflation, sales volumes will increase by more than sales values.
Posted in Spending.
Tagged with brc, british retail consortium, consumer spending, contraction, deflation, discretionary, food, Inflation, non-discretionary, prices, retail sales.
By Samuel
– 12 January, 2010
The latest edition of the Monster Employment Index UK , which provides monthly insight into online recruitment trends, was published earlier today.
- The index rose to 114 in October, a 7 point increase on September’s 107 but still down 29% year-on-year from 161 in October 2008.
- Online job availability rose in eight out of the nine regions in October, with Wales leading with a 21 point (12%) jump to 195 from September’s 174 as job activity increased for the first time in five months. Increases were also seen in Scotland (up 9%), South West (up 8%) and North England (up 7%). However, all regions fell year-on-year.
- Northern Ireland was the only region to edge lower in the Index, losing 1 point, 1%, as demand fell for the third straight month.
- The Midlands showed the largest annual rate of decline, falling by 36%, due to decreasing hiring in construction and extraction; environment, architecture and urbanism; and engineering.
- Online hiring increased in the majority of sectors, led by strong growth in Education, up 22% on the month to 281, Hospitality and Tourism, up 14% on the month to 141, and Public Sector, Defence, Community, up 13% on the month to 114.
- Year-over-Year only three sectors are up. Notably they also strongly tied to the public sector. Education, Training and Library is up over 29% to 281 from 217 in October 2008. Healthcare and Social Work is up 29% to 329 from 255 a year ago. Public Sector, Defense and Community is up 6% to 114 from 108 a year previously.
- Professionals was the worst-performing occupational group on a year-on-year basis. Despite a modest rise in October to 107, from September’s 103, the group is still down 38% from the 171 recorded in October 2008. The decline Reflects a contraction in the job market for highly-skilled and often highly-paid professional workers. In contrast, demand has held up well for technicians and associate professionals, suggesting employers are hiring lower-level professionals in order to control labour costs.
Commenting on the latest figures, Hugo Sellert, head of economic research at Monster Worldwide, said,
“Despite economic indicators showing that the UK remains mired in recession, the solid expansion in online recruitment activity in October suggests the fourth quarter is off to a better start.
“The rise in online job openings to an eight-month high points to an early recovery in hiring demand. Companies across the UK may now be considering expanding payrolls again as economic conditions have stabilised”.
Release: Monster Worldwide Employment Index UK October 2009 [PDF].
Posted in Economy.
Tagged with employment, jobs, monster, private sector, public sector, recession, tax consumers, tax payers, unemployment.
By Samuel
– 10 November, 2009
