A good start to 2014, a strong end to 2013

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2014 starts the year with some more good news about the end of 2013. Today's manufacturing PMI was slightly weaker than the 33-month high of November but remained firmly above 50 indicating expansion in the sector.

Today's figures

  • December's manufacturing PMI was 57.3, down slightly from November's 58.1.
  • The average PMI reading for the final quarter as a whole was 57.2, the highest quarterly reading since the first quarter of 2011.

Now that we have a full year of data, we can see that the 2013 year as a whole has been one of steady improvement. After falling into negative territory in the early part of the year, the sector has seen activity steadily pick up from about April.

Steady improvement in manufacturing activity over 2013UK manufacturing Purchasing Managers Index, 50=neutral What's going on in our largest market?

The Eurozone manufacturing PMI rose for the third consecutive month in a row and shows that overall activity in the sector is expanding. The indicator reached a 31-month high of 52.7 in December.

Most countries in the region are seeing manufacturing activity expand with the major exception of France, which posted a 7-month low of 47.0 at the end of 2013.

Most Eurozone countries showing expansionManufacturing Purchasing Manufacturing Index, 50=neutral What does the year ahead hold?

The short answer is one of continued improvement. In the UK we expect total output to expand by 2.4% in 2014 and the Manufacturing sector to grow slightly stronger at 2.7%.

We also expect the Eurozone to grow in 2014, expanding 0.9% after a contraction of 0.4% in 2013. The outlook for other international markets is somewhat mixed – we expect the US economy to expand 2.6% in 2014 but emerging markets are looking somewhat weaker. We expect China to see growth of 7.3%, down from growth of around 7.6% in 2013 while India is expected to remain more subdued with growth of 4.3%.

Happy New Year everyone!

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