Thursday, May 06, 2010
Under the volcano
Posted by David Smith at 10:30 AM
Category: Thoughts and responses

Three in a row was a bit too much to ask for and the service sector purchasing managers' index disappointed, slipping from 56.5 to 55.3. Some of this, however, may have been due to special factors, and one factor in particular.

As Markit, which produces the PMI for the Chartered Institute of Purchasing and Supply put it: "Amid some reports that the volcanic ash cloud had disrupted business operations – particularly in the Transport, Storage & Communications sector – the rate of activity growth weakened for a second successive month to the slowest since January’s snow-related low.

"According to respondents, the volcanic ash cloud also undermined new business gains in April, while there were also reports that the forthcoming general election had led to uncertainty amongst some clients. Nonetheless, there were many reports that underlying conditions had improved, creating a generally favourable environment to secure new contracts. Despite easing to a three-month low, overall new business growth was solid."

The dip in the service sector PMI followed a jump in the construction industry index from 53.1 to 58.2, and a strong rise in the index for manufacturing.