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Unexpected leap in Swedish PMI but activities still low

Tuesday, 01 November 2011
After five months of decline in the Swedish purchasing manager’s index, it surprisingly turned the corner and rose in October. Particularly pleasing was that the sub-index on new orders which skipped forward.

Purchasing managers' index for the industry rose in October to 49.8 from 48.1 in September. The increase was unexpected and comes after five months of declining indices. The largest contribution to this rise came from the sub-index on new orders, which rose to 50.5 from 46.2 in September.

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"It's the first time since June as new orders are rising, albeit weakly. However, it is too early to determine if a trend exists, "said Swedbank and Silf trade association, which publishes the index.

Also the sub-index of employment rose slightly. - "Order intake as well as employment  has now reached up over 50, suggesting that the decline in manufacturing activity came to a halt in October, "writes Swedbank and Silf.

Line 50points is supposed to be the border between expansion and contraction. Despite the rise in October the purchasing managers' index still remained at levels that suggest declining activity. It also seems to be what companies expect. Production plans were adjusted down further in October and sub-indices of the layers of purchasing materials fell below 50 for the first time in a year.
"The relatively large decline can probably be explained by the fact that the companies intentionally have reduced their inventory levels after expectations of a weaker industrial economy, "wrote Swedbank and Silf.

Most dramatic was the movement in the sub-index of raw and intermediate goods prices, which fell to 39.9 in October from 47.0 in September.
"Price pressures from producer have thus decreases at an increasing rate, "wrote Swedbank and Silf.
By Scancomark.se Team




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