The strong set of manufacturing PMIs for February indicates that industry remains in rude health. That said, as elsewhere, there are signs of supply problems and rising price pressures.
Industry in top gear, as supply constraints come into view
- The strong set of manufacturing PMIs for February indicates that industry remains in rude health. That said, as elsewhere, there are signs of supply problems and rising price pressures.
- The Swedish PMI adds to signs that the industrial sector is holding up well. Admittedly, the fall in the headline index was at odds with the rise in the manufacturing component of the ETI (released last week). Moreover, the reading was flattered a bit by reports of longer delivery times, which are usually a positive sign of rising capacity utilisation but are currently a symptom of supply disruption: the supplier delivery times index jumped to an eye-watering 81.2 (see Chart 2), its highest level since 1995.
- However, at 61.6, the headline PMI is still consistent with double-digit year-on-year growth in industrial output. (See Chart 1.) What’s more, the jump in the hiring intentions component was encouraging, as was the fact that Swedish firms remain bullish about production over the next six months.
- Meanwhile, the rise in the Swiss manufacturing PMI in February, from 59.4 to a 30-month high of 61.3, echoed the increase in the KOF Economic Barometer. (See Chart 3.) The pick-up from December was broad based, with the production component reaching its highest level since September 2018 and the employment series rising further above the 50-mark.
- Finally, the Norwegian manufacturing PMI came in above expectations, rising from an upwardly-revised 52.5 in January to a 23-month high of 56.1. Export orders rose back above 50 and point to a sharp acceleration in mainland export growth in the near term. (See Chart 4.) As in Switzerland and Sweden, the prices subcomponent rose – in Norway’s case to a record high of 83.1.
Chart 1: Euro-zone & Sweden Manufacturing PMI Supplier Delivery Times Component
Chart 2: Sweden Manufacturing PMI &
Chart 3: Switzerland KOF Economic Barometer & Manufacturing PMI
Chart 4: Norway PMI Export Orders & Exports
Sources: Refinitiv, Swedbank, Procure, Capital Economics
Melanie Debono, Europe Economist, email@example.com