January 22, 2018

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PMI rises to 52.5 in last month

02 January 2018

Consequently, firms increased their selling prices notably.

IHS Markit's Purchasing Managers' Index (PMI) for manufacturing, which accounts for about a quarter of the economy, jumped to an all-time high of 63.3 from 62.5 in the previous month.

Smith said the PMI not only posted the highest reading ever recorded since the survey began in 1996, but its current 37-month sequence of improving business conditions also beat the previous record set in the runup to the financial crisis. The rate of expansion in France was the fastest for over 17 years. The December figure was the highest reading since August. It was the first slowdown in growth since early 2016. In turn, new export orders rose at the quickest pace since June.

According to data compiled by Nikkei Malaysia Manufacturing Purchasing Managers Index, manufacturers ended the 2017 year stagnant.

The slowdown was reflected in the drop in buying activity in December, the sharpest decline since September.

"Meanwhile, the Future Output Index signalled the strongest level of confidence in three months, with more than one-in-five survey participants forecasting higher production".

Chinese steelmakers in 28 cities have been ordered to curb output between mid-November and mid-March, while a campaign to promote cleaner energy by converting coal to natural gas has also hampered manufacturing activity in some cities, leading to shortages and sending prices spiking.

However, the sector continues to face some turbulence as delayed customer payments contributed to greater volumes of outstanding work. In breakdown, the new order index for the service sector increased slightly slower month on month to 50.9, and that for the construction sector rose at a faster pace to 58.1.

Moreover, as consumer spending recuperated, firms were restricted in their ability to pass on higher cost burdens to clients which further placed upward pressure on firms' margins.

"Challenges remain as the economy adjusts to recent shocks, but the overall upturn was robust compared to the trend observed for the survey history".

Despite December's poor data, businesses retained positive forecasts for output over the next 12 months as manufacturers project improvement in underlying demand conditions according to anecdotal evidence.

PMI rises to 52.5 in last month