• Strategy analysis: Economic data

    Posted on February 1, 2012 by in Research findings, Strategic analysis
    Strategic analysis - manufacturing recovery still has a way to go

    Manufacturing recovering slowly?

    New strategy analysis in the form of the influential Markit survey of purchasing managers in the European manufacturing sector has just been released. It shows that there was overall contraction in the EU, albeit at a slower rate than in the last quarter of 2011, but within this total slowdown, there were a few bright spots, including a return to growth in Germany, Austria and the UK, with the rate of decline slowing in other European countries.
    The EU overall Final Manufacturing PMI was up to 48.8 in January. The way this index is scored means that any result below 50.0 signals a worsening of business conditions, the index hit a five-month high of 48.8, up from 46.9 in December and in the UK, the Markit/CIPS UK Manufacturing PMI® rose to 52.1 in January with output growth accelerating to a ten-month high.

    Chris Williamson, Chief Economist at Markit said: “Euro area manufacturing has started 2012 surprisingly well, suggesting the region may avoid a slide back into recession.”  However, he also cautioned that: “The concern is that new orders have yet to return to growth, even in Germany, suggesting that companies will be reluctant to expand capacity and take on more staff until signs of stronger demand have appeared.”
    However, the signals remain mixed. The IPA Bellwether report that Markit published on 19 January 2012 concluded that “Business confidence slumps amid uncertainty surrounding the future path of economic growth”

    The road to recovery remains uncertain and, once again, we need to see a clear trend over a period of months before there can be any certainty about future economic direction.

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