UK PMI Manufacturing was finalized at 55.2 in August, up from July’s 53.3. That’s also the highest level in 30 months. Markit noted output and new orders rose at solid and accelerated rates. Input price inflation was also at 20-month high.
Rob Dobson, Director at IHS Markit:
“The recovery of the UK manufacturing sector gathered pace in August. Output expanded at the fastest rate in over six years as new work intakes rose to the greatest extent since November 2017, led by an upturn in domestic demand and signs of recovering exports. Business optimism also remained encouragingly robust and close to July’s recent peak.
“However, companies report that the current bounce is mainly driven by the restarting of manufacturers’ operations and reopening of clients as COVID-19 restrictions continue to be relaxed. Backlogs of work fell at an increased rate, hinting at spare capacity, and the labour market remains worryingly weak, with job losses registered for the seventh straight month. The downturn in employment may have further to run as the government’s furlough scheme is phased out unless demand rises sharply.
“Given the fragility of demand and uncertain outlook, both in terms of COVID-19 and Brexit, policymakers may struggle to prevent a ‘surge-then-slump’ scenario from developing.”
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China PMI services ticked down to 54.0, but employment grew again
China Caixin PMI Services dropped slightly by -0.1 to 54.0 in August, matched expectations. Markit said new order growth eased further but remained strong. Staff numbers expanded for the first time since January. Output prices rose amid further increase in operating costs. PMI Composite rose to 55.1, up from July’s 54.5.
Wang Zhe, Senior Economist at Caixin Insight Group said: “Overall, the recovery of the manufacturing and services sectors from the epidemic remained the main theme of the economy. Supply and demand both expanded. The gauges for orders, purchases and inventories all remained strong. Price measures remained stable. Over the past half year, external demand and employment remained subdued generally, but in August, employment for the services sector started to improve and employment for the manufacturing sector approached a turning point.
” However, there were still uncertainties from Covid-19 overseas, which could constrain the “dual circulation” of domestic and international markets. Improvement in employment in the post-epidemic era requires longer-term market recovery and longer-term stability of business expectations. During this process, support from relevant macroeconomic policies is essential.”
Full release here.