UK PMI Manufacturing dropped to 47.4 in December, down from 48.9, missed expectation of 49.4. That’s also the lowest level in 4 months. PMI Services dropped to 49.0, down from 49.3, missed expectation of 49.6. That’s the lowest level in 9 months. PMI Composite dropped to 48.5, down from 49.3, lowest in 41 months.
Commenting on the latest survey results, Chris Williamson, Chief Business Economist at IHS Markit, said:
“December’s PMI survey data sadly lacked festive cheer, indicating that the economy contracted for the third time in the past four months. The latest decline was the second largest recorded over the past decade, and increases the likelihood that the economy contracted slightly in the fourth quarter as Brexit-related uncertainty intensified in the lead up to the general election.
“New orders fell for a fifth straight month, causing jobs to be cut for a fourth successive month as firms scaled back operating capacity in line with weakened demand.
“The principal drag on order books was falling export sales, with overseas demand for UK-produced goods and services slumping in the past two months to an extent not seen since at least 2014.
“Manufacturing production is falling at a rate exceeded only once since the height of the global financial crisis in early- 2009, but output of the vast service sector has now also fallen in each of the past two months, representing the first back-to-back declines since 2009.
“Any positive aspects of the survey came largely from the sentiment indicators, with future expectations rising to the highest since June as firms hope that the election will bring clarity on the outlook and remove some of the uncertainty that has been holding back demand.”
Full release here.
US PMI composite rose to 52.2, economy continuing to regain growth momentum
US PMI Manufacturing dropped slightly to 52.5 in December, down from 52.6, beat expectation of 52.4. PMI Services rose to 52.2, up from 51.6, beat expectation of 51.4. PMI Composite rose to 52.2, up from 52.0, hitting a 5-month high.
Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit, said:
“The surveys bring welcome signs of the economy continuing to regain growth momentum as 2019 draws to a close, with the outlook also brightening to fuel hopes of a strong start to 2020. Business activity, order book and jobs growth all accelerated to five-month highs in December, buoyed by rising domestic sales and further signs of renewed life in export orders.
“December’s expansion was led by an improved performance of the vast services sector, accompanied by another month of steady manufacturing growth. Encouragingly, expectations for business activity in the year ahead lifted higher in both sectors to reach the highest since June to suggest the expansion will continue to gain momentum as we head into the New Year. Optimism reflected reduced fears over trade wars and more favorable financial conditions.
“The brighter news needs to be caveated, as the overall rate of economic expansion signalled by the surveys remains well below that seen this time last year, commensurate with GDP rising at an annualised rate of just over 1.5%. Importantly, however, the welcome signs of improvement help to ward off recession risks and should keep the Fed on hold in the coming months. The upward trajectory in the surveys support our expectations that the US economy is on course to see another year of above-potential GDP growth of approximately 2.2% in 2020.”
Full release here.