Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
Preliminary PMI survey data showed economic growth slowing in
the US and UK as strong pandemic rebounds showed signs of fading.
In contrast, a reopening of economies in the eurozone and Japan
helped drive improvements, helping to offset weakened manufacturing
performances arising from fresh supply delays. Shortages of inputs
were linked to the Ukraine war and lockdowns in mainland China.
A fall in backlogs of work in the UK meanwhile suggests the UK
could underperform the US and eurozone in coming months as pent-up
demand is depleted. However, in all four of the largest developed
countries, future output expectations have slumped far lower than
seen earlier in the year, attributable to increasing concerns about
future economic growth amid the Ukraine war, policy tightening and
the rising cost of living. The latter was underscored by the
surveys signalling further steep inflationary pressures, with rates
of inflation for goods at services once again at or near record
highs across the developed world in April.
Developed world growth rates vary as economies
re-open
The flash PMI survey output indices, which track current
business activity levels, showed growth slowing in the UK and US,
caused primarily by weaker service sector expansions. This
reflected some cooling of demand for services compared to very
strong rates of expansion seen in February and March, when these
economies reopened from Omicron-related containment measures. Both
the UK and US saw the near complete removal of any virus-related
restrictions on activity in February and March.
In contrast, the eurozone has seen COVID-19 containment measures
relaxed later, and less aggressively than the US and UK. This has
meant the boost to services such as travel, tourism and recreation
has likewise occurred later in the eurozone, providing the main
boost to eurozone economic growth in April at a time when these
effects were fading in the US and UK.
In Japan, some easing of COVID-19 containment measures also
helped lift the economy back into expansion territory, though with
restrictions remaining tighter than in the US and Europe, the rate
of expansion remained relatively subdued.
The survey data therefore suggest that the tailwind of looser
health restrictions associated with the pandemic continues to drive
the economic recovery in the world's major developed economies,
albeit with these forces moderating in the US and UK.
Meanwhile, manufacturing in the US continued to benefit from
pent-up demand from the pandemic and some moderation in the number
of production constraints relative to the shortages seen last year,
with a similar boost also recorded in the UK.
However, the eurozone saw manufacturing hit by worsening
logistics issues as the proximity of the war in Ukraine disrupted
supply lines. Most notable was an auto-sector-led drop in
manufacturing output in Germany, which contributed to a
near-stalling of factory output growth across the single currency
area. Similarly, production in Japan continued to be restricted by
supply shortages, emanating in part from new lockdowns in
China.
Backlogs of work hint at UK weakness
ahead
Some major clues as to what the future holds can be gleaned from
the PMI survey's backlogs of work indices. These indicators track
the amount of work in hand that companies are reporting, which in
turn reflects the extent to which recent demand has exceeded their
operating capacity. As such, the backlogs of work indices provide
powerful signals of how busy companies are likely to be in coming
months.
These indicators showed the US continuing to see an
unprecedented build-up of uncompleted orders in April, after a
record rise in March. Similarly, eurozone companies reported a
further strong rise in backlogs, hinting at sustained output growth
in coming months - especially if supply bottlenecks ease.
Conversely, the UK saw backlogs of work fall for the first time
since February 2021, suggesting the output slowdown has further to
run. Similarly, Japanese growth may remain subdued in the coming
months absent a renewed upturn in demand, given a slight fall in
levels of outstanding business during April.
Optimism subdued
Forward-looking signals are also being sent by the PMI survey's
future output expectations indices. Unlike the other PMI series,
these data are subjective, based on views among companies relating
to their own expected output in 12 months' time, so in theory
presenting a longer time horizon for the outlook than the backlogs
of work indices.
Sentiment for the next 12 months picked up in the Eurozone and
Japan, in April albeit merely remaining close to long-run averages.
Steep falls were meanwhile seen in the US and UK, leaving the US
index just above its long-run average and the UK index just below
its mean. Hence all four surveys are now signalling forward
expectations of much weaker growth than had been indicated earlier
in the year (prior to March, all four had seen their future
expectations indices running at least one standard deviation higher
than the long run mean).
Price indicators at unprecedented levels
Business expectations were dampened in all cases in part by
concerns over rising prices, notably for energy, not just in terms
of the impact on companies' costs but also on the impact on
customers, as rising inflation poses a key threat to future
spending power.
Inflation is already running at multi-decade highs in the US,
eurozone and UK, and with the PMI survey data signalling a further
surge in companies' costs in April, such elevated inflation
readings look likely to persist in coming months. Average input
costs across manufacturing and services rose at a record rate in
both the US and Japan in April, with near-record rates seen in the
eurozone and UK.
These higher costs fed through to another surge in prices
charged to customers. New record rates of increase for average
prices levied for goods and services were reported in the US and
eurozone, with a near-record high also reported in the UK (where an
easing in the rate of increase was often linked to customers
kicking back on price hikes). Japan likewise saw rate of selling
price inflation accelerate, reaching the highest since the
consumption tax hike of April 2014.
Growth risks tilted to the downside amid multiple
headwinds?
In addition to rising prices and the cost-of-living squeeze,
firms are also concerned over the prospect of rising interest rates
as central bank seek to anchor inflation expectations. The Ukraine
war and lingering effects of the pandemic, especially via ongoing
lockdowns in China, represent further major concerns among many PMI
survey respondents. While the reopening of economies from COVID-19
containment measures still represents a welcome tailwind for the
coming months, the big question will be the extent to which whether
these mounting headwinds may prevail.
Chris Williamson, Chief Business Economist, S&P
Global Market Intelligence
Purchasing Managers' Index™ (PMI™) data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.
At the same time, business costs increased at historically elevated rates, with new record levels of cost inflation… https://t.co/ofDaBfq7KX
May 25
{"items" : [
{"name":"share","enabled":true,"desc":"<strong>Share</strong>","mobdesc":"Share","options":[ {"name":"facebook","url":"https://www.facebook.com/sharer.php?u=http%3a%2f%2fihsmarkit.com%2fresearch-analysis%2ffurther-surge-in-price-pressures-in-april-casts-mounting-shadow-over-growth-outlook-Apr22.html","enabled":true},{"name":"twitter","url":"https://twitter.com/intent/tweet?url=http%3a%2f%2fihsmarkit.com%2fresearch-analysis%2ffurther-surge-in-price-pressures-in-april-casts-mounting-shadow-over-growth-outlook-Apr22.html&text=Further+surge+in+price+pressures+in+April+casts+mounting+shadow+over+growth+outlook+%7c+IHS+Markit+","enabled":true},{"name":"linkedin","url":"https://www.linkedin.com/sharing/share-offsite/?url=http%3a%2f%2fihsmarkit.com%2fresearch-analysis%2ffurther-surge-in-price-pressures-in-april-casts-mounting-shadow-over-growth-outlook-Apr22.html","enabled":true},{"name":"email","url":"?subject=Further surge in price pressures in April casts mounting shadow over growth outlook | IHS Markit &body=http%3a%2f%2fihsmarkit.com%2fresearch-analysis%2ffurther-surge-in-price-pressures-in-april-casts-mounting-shadow-over-growth-outlook-Apr22.html","enabled":true},{"name":"whatsapp","url":"https://api.whatsapp.com/send?text=Further+surge+in+price+pressures+in+April+casts+mounting+shadow+over+growth+outlook+%7c+IHS+Markit+ http%3a%2f%2fihsmarkit.com%2fresearch-analysis%2ffurther-surge-in-price-pressures-in-april-casts-mounting-shadow-over-growth-outlook-Apr22.html","enabled":true}]}, {"name":"rtt","enabled":true,"mobdesc":"Top"}
]}