PMI falls to 51.5 in January: Manufacturing continues to slow
• The PMI fell in January to 51.5 from 51.8 in December, reaching the lowest level since February 2016. This means that manufacturing activity continued to slow in the first month of the year. The reason for increased caution going forward is the trend in new orders and order backlogs, which fell to the lowest level in three years, says Jörgen Kennemar, who is responsible for analysis of the PMI at Swedbank.
• New orders were the biggest contributor to the PMI decline, followed by inventories. The employment sub-index resisted the trend and posted the biggest positive contribution to the PMI, followed by suppliers’ delivery times and production.
• Corporate production plans are less optimistic and the index dropped for the second month in a row to 61.4, from 63.1 in January, which nevertheless means that a majority of companies expect to raise production in the next half-year.
• The index for prices of commodity and intermediate goods fell 3.5 points in January to 48.3, corresponding to a decline of 25 points from a year ago. The outcome signals significantly lower price pressure at the producer level, which could eventually have an impact at the consumer level, says Jörgen Kennemar.
The Purchasing Managers’ Index (PMI) is a business cycle indicator for the Swedish economy produced by Swedbank in cooperation with Silf. The PMI is produced for both the manufacturing and service sectors. The aim of the PMI is to get a quick measure of the current state of the economy. Each month purchasing managers are surveyed and an index calculated. An index level above 50 indicates expansion, while a level below 50 signals a contraction. The PMI for the manufacturing sector is published on the first banking day of each month at 8:30 am (CET), while the corresponding index for the service sector is published on the third banking day of each month at 8:30 am (CET).
Next publication of Purchasing Managers’ Index: Friday, 1 March 2019
Jörgen Kennemar, Swedbank Public Affairs, tfn +4670- 643 83 29, firstname.lastname@example.org
Anna Sjöblom, Silf, tfn +4673 – 518 70 11, email@example.com