Tuesday, November 3, 2009
Manufacturing output improving?
Yesterday we saw the publication of some slightly more encouraging data on the UK's manufacturing sector. The Chartered Institute of Purchasing and Supply's Purchasing Managers Index (PMI) rose to 53.7% in October. This compared to a figure just below 50% in September. In the United States the equivalent PMI is a major economic release and this would have hit the headlines. However, in the UK this data is more low key. The significance of the data is that any figure above 50% indicates that this sector is growing. So the rise from below 50% to 53.7% in October could be taken a clear sign that the worst is over. However, we should wait to see this trend confirmed with November's data published in early December.
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In the United States information about rise in Institute for Supply Management's factory index from 52.6 to 55.7 was received with relief.It is considered as a sign that economy is starting to recover from recession which was seen in movements on the stock exchange market in US and Europe. The Employment figure of the ISM, which is one of the ISM's index components, rose from 46.2 to 53.1. This is considered as a sign that factory sector payroll stabilised. This information was seen as a positive signal that economy is slowly making its way out of recession especially after US employment release on friday in which was revealed that unemployment rate rose to its record level since 26 years to 10.2 %
The increasing in manufacturing output had given sign for economic recover in US, Europe and Asia. Even though this is a low key economic data but it is indicated that the recession is over. Moreover, the manufacturing had recovered quickly globally at its fastest rate for 5 years.
JPMorgan global composite purchasing managers' index rose to 54.4, up from 53 in September, the highest value since July 2004. However, the bigger shock came in the US, as Institute for Supply Management's factory index rose to 55.7 from 52.6 in September where the unemployment rate had risen again from 9.8 to 10% (as at 3/11/11). Thus they would still anticipated that there will be more job loss in the weeks or months to come.
I think that the increasing in the manufacturing output shows that it encourages new orders as world trade is starting again slowly with cautious. As the closing price for the Eurofirst 300, FTSE 100 and S&P 500 rose 0.39 per cent, 1.2 per cent and 0.44 per cent respectively.
Two of the 'BIG THREE' major car manufactors reconfirmed that there have been an increase in sales in the US. This was reflected in the US stock index (Dow jones ind).
However, the clear increase in the manufacture output does not reveal the improvement as the US employment has illustrate that unemployment has rose. But we can say this 'improvement' has slowed unemployment.
Again, I would have to disagree that the manufacturing increased output indicates recovery as energy prices are raising, many are opting for alternatives to reduce costs.
The manufacturing sector is improving, however, this and the construction sectors were hit heavily in the employement rates.
its good to see an improvement, however, it will take a long time to recover to what it used to be.
Better than expected expansion of manufacturing activity lifted the markets to a higher close with the Dow Jones index rose 76 points to 9789 on the day. Nasdaq was up 4 points to 2049. The reports boosted recovery hopes.
But my question is: Does the survey include small industries and the services sector too? As the small industries plus the services sector account for over two thirds of the economy.
I used my old google account first and I realised after that it had my maiden name (mbabazi).
Better than expected expansion of manufacturing activity lifted the markets to a higher close with the Dow Jones index rose 76 points to 9789 on the day. Nasdaq was up 4 points to 2049. The reports boosted recovery hopes.
But my question is: Does the survey include small industries and the services sector too? As the small industries plus the services sector account for over two thirds of the economy.
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