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© 2017 IHS Markit. All Rights Reserved.

Purchasing Manager Index and the Global Outlook

6 February 2018 | Frankfurt, Germany

Chris Williamson, Economics Executive Director

+44 20 7260 2329, [email protected]


PMI Global Overview / February 2018IHS Markit Global PMI

2

Current coverage

Recent expansion

40+Countries

27,000+Companies

83%Global GDP

IHS Markit PMI surveys

Global coverage continues to rise


The world according to the PMI this time last year:


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• Global economy accelerating (PMI at 11-month high)

• Emerging markets showing signs of life (China especially better than expected)

• US economy faring well, meaning rate hikes on the way

• Eurozone enjoying best spell since 2011, likely to surprise on the upside in 2017 with ECB likely to sound

more hawkish as deflation fears fade

• UK showing surprising resilience with PMI at 1½ year high, but widespread Brexit worries bode ill for

growth and investment

• Global commodity price pressures rallying

• Auto sector growth picking up (notably in Europe), but higher costs squeezing margins to greatest extent

since 2011


Eurozone economic growth at 12-year high

GDP data understating the boom


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Eurozone economic growth and PMI Eurozone GDP revisions


Eurozone broadening upturn adds to sense of self-sustaining growth

France joins the party, eurozone labour market surges


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Eurozone economic growth and PMI Eurozone employment


Eurozone price pressures

Rising price pressures point to tighter monetary policy


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Eurozone price pressures v core CPI ECB decisions v Eurozone price pressures


UK economy’s resilience shows cracks at start of 2018

PMI slides to lowest since August 2016


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United Kingdom economic growth and PMI UK PMI v Bank of England policy


UK suffering from lack of domestic demand and investment

Construction under particular stress from Brexit uncertainty


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United Kingdom PMIs by sector UK investment and commercial construction


United States: steady as she goes

Manufacturing outperforms


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United States economic growth and PMI United States manufacturing output


Better than expected growth in Japan and China

China PMI at seven-year high


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Japan PMI China PMI


Brighter signs of emerging market life

PMI data add to expectations of stronger growth in 2018


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Brazil PMI Russia PMI India PMI


Global economy starts 2018 on a solid footing

PMI highest since September 2014 as emerging market growth hits five-year high


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Global economic growth Developed v emerging market output


Europe heads up manufacturing

Asia lags behind


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Manufacturing PMI rankings


Global employment

Hiring at decade-high


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Global employment and capacity Developed v emerging market employment


Cyclical upturn in global investment

Machinery & equipment demand surges


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Global PMI Output Indices


Input prices

Global sector PMI


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All-sector input costs


Global industrial prices

Price recovery on-going


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Global industrial prices Industrial prices v emerging market output


Supply constraints indicative of sellers’ market

Worldwide supplier delivery times lengthening to greatest extent since 2011 in recent months


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Global supply delays and production Global supply delays and prices


Global autos PMI output

PMI averaged 53.6 in 2017


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Global autos PMI by region

Upturn led by Europe


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Global PMI auto sector output by region Auto production, annual % change

2015 2016 2017 (f) 2018 (f)

Global 1.6 4.8 2.1 1.9

Europe 4.0 2.8 3.2 1.9

Europe excl. UK 3.9 2.3 3.8 2.2

UK 5.5 7.9 -3.1 -2.3

US 3.6 1.3 -8.1 1.0

China 4.7 14.2 2.2 0.6

Asia excl. China -1.1 0.3 2.8 0.8

Source: IHS Markit.


Global autos PMI - purchasing and supply chains

Worldwide


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Global auto sector supply chains Global auto supply delays and input prices


Global autos PMI - purchasing and supply chains

Worldwide


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Global auto sector capacity Autos supply chains

Sub-50 readings mean more delays


Global autos PMI - prices

Auto sector cost pressures above global manufacturing average


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Global input prices Global selling prices


Global autos PMI - prices

Worldwide


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Global input prices Global selling prices


Operating marginsDifference between selling price and input cost inflation


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Global PMI Margin Indicator


The world according to the PMI this time last year:


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• Global economy accelerating (PMI at 11 40-month high)

• Emerging markets showing signs of life (China especially better than expected)

• US economy faring well, meaning rate hikes on the way

• Eurozone enjoying best spell since 2011 2006, likely to surprise on the upside in 2017 2018 with ECB

likely to sound more hawkish as deflation fears fade inflation perks up

• UK showing surprising waning resilience with PMI at 1½ year high low, but as widespread Brexit worries

bode ill for are curbing growth and investment

• Global commodity price pressures rallying, and now feeding through to consumers

• Auto sector growth picking up robust though possibly peaking (notably in Europe), but higher costs and

weak pricing power squeezing margins to greatest extent since 2011


More informationihsmarkit.com/research-analysis/financial-markets.html


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