Friday, August 03, 2012
Surveys suggest downbeat July
Posted by David Smith at 11:30 AM
Category: Thoughts and responses

After the manufacturing purchasing managers' index earlier in the week - sharply down - and that for the construction sector, surprisingly up, today we had the service sector reading.

It fell from 51.3 to 51, so still expanding, but at a slower rate. However, according to Markit, which prepares the data:

"The Markit/CIPS PMI surveys for July collectively signalled the weakest economic performance since April 2009, a downturn which can only in part be attributed to temporary factors.

"Markitís all-sector PMI fell for the fourth month running in July, down from 51.1 in June to 49.5, signalling the first monthly fall in output since April 2009. The decline was led by the sharpest drop in manufacturing output for three years, while growth of services activity was only modest and the weakest since heavy snowfall disrupted business in December 2010. Construction activity also rose only moderately, but the increase was at least an improvement on the downturn seen in June.

"At 49.5, the current level of the PMI is historically consistent with gross domestic product stagnating at the start of the third quarter. The average of 52.2 seen in the second quarter is consistent with GDP growing by 0.1% while the first quarter average of 54.8 signalled GDP growth of 0.5%."

Note that Markit continues to challenge the recent GDP numbers.