Manufacturing PMI likely fell again
The purchasing managers’ index for UK manufacturing in September is due Thursday. The PMI fell slightly in August to 51.5, indicating the pace of manufacturing growth weakened somewhat. The main driver was a drop in the sub-index for capital goods. Low energy prices have discouraged investment in the oil and gas industry, hitting the sub-sectors in the supply chain such as mechanical - and electrical - equipment. The PMI likely fell again in September because energy prices remain relatively low, China’s economic growth is slowing, and the pound remains relatively strong against the euro. EEF’s Business Trends survey for the three months to September showed a sharp weakening in manufacturing indicators.
Take one for Q2 labour productivity
The UK labour productivity report for the second quarter is also out Thursday. The labour productivity - as measured by output per hour – of manufacturing typically outperforms the average for the whole economy. Yet the data for the three months to March showed the productivity of manufacturing fell in quarter-ago terms but rose in the economy as a whole. The Office of National Statistics attributed this to the hours worked, and jobs, in manufacturing growing steadily while the sector’s output flattened out. Productivity is the buzzword of the moment but there is a lack of understanding amongst policy thinkers and the general public about what it is, how it is measured, the benefits of higher levels of it, and how businesses actually view and measure it.
Take three for Q2 GDP
The third estimate of UK real GDP in the second quarter is out Wednesday. Earlier estimates indicated the economy grew 0.7% in quarter-ago terms while manufacturing fell 0.3%, the first decline in around two years. There’s a risk of revisions to the GDP data.