A sharp downturn in employment growth set the negative tone for the IHS Markit Purchasing Managers’ Index (PMI) for February, however there was also strong demand from US clients that helped support overall new export orders.
Employment numbers rose at their slowest pace since the beginning of 2017, while growth of production volumes and incoming new work remained among the weakest seen over the past two years, although the latter accelerated since January, IHS Markit reports.
The seasonally adjusted PMI dropped from 53.0 in January to 52.6 last month, signalling the slowest overall improvement in business conditions since December 2016. A softer rate of job creation and stagnating pre-production inventories were the key factors holding back the index in February. A slight rebound in new order growth was the main positive contribution to the headline index.
February saw only a modest increase in production volumes, with the rate of expansion only fractionally stronger than January’s 25 month low. New business volumes increased at a slightly faster pace than at the start of the year, but the latest rise was still one of the weakest seen since the second half of 2016. Survey responses indicated that subdued client demand held back manufacturing output growth in February. A number of firms noted that global trade frictions and heightened economic uncertainty had led to delayed decision making among clients. Moreover, some manufacturers commented that higher cost burdens added to rising prices for steel intensive items had dampened competitiveness in export markets.
On a positive note, there were also reports that strong demand from US clients had helped to support overall new export order volumes in February.
The full text of the report is available here.