Wednesday, February 05, 2014
Never mind the weather
Posted by David Smith at 09:45 AM
Category: Thoughts and responses

The three puchasing managers' surveys suggest the economy grew well through the wettest January for very many years. Given the UK's penchant for weather-disrupted growth that is a comfort.

The construction PMI was the star performer of the three. The service sector PMI slipped to 58.3, from 58.8 in December, and is at its lowest since last summer. It remains consistent, however, with strong growth.

This is Markit's assessment:

"The UK economy enjoyed a strong start to 2014, according to PMI™ surveys. Despite unusually wet weather, business activity continued to rise at a robust pace and hiring gathered further momentum to equal the record increase seen in October.

“The three Markit/CIPS PMI™ surveys collectively signalled an expansion of private sector business activity for the thirteenth successive month in January. At 59.1, down from 59.4 in December, the ‘all sector’ output index signalled a slight easing in the pace of growth for a third successive month, down to the weakest since June, but nevertheless remained elevated by historical standards of the survey.

“Comparisons of the PMI with GDP data indicate that the economy is on course to grow by 0.8% in the first quarter (assuming the index remains relatively unchanged in February and March), thereby extending the economy’s buoyant growth run that has been evident since last spring.

“The PMI survey also showed private sector hiring gathering momentum again to equal October’s all-time high, adding to the sense that the mild slowdown in activity in January may reverse in February. The January ‘all sector’ employment index is roughly consistent with business sector employment growing at a rate of 150,000 per quarter. Marked rates of job creation have been evident in manufacturing, services and construction alike in recent months, with rates of increase picking up in both services and construction in January and easing only slightly from December’s robust pace in manufacturing."