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PMI should push back on expectations of an early cut

UK DATA
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Significant news in the UK PMI release. In contrast to the flash French, German and EZ releases there is a rise in input prices and lenthening of suppliers lead times to the greatest extent since July 2022. However, even more significant is that labour service costs remain high and this is leadin to a "renewed acceleration in prices charges" across the private sector. This will be a concern for the MPC - and should push back further expectations of an early cut.
Highlights from the press release:

  • "Manufacturers recorded only a modest rise in their input prices, despite higher shipping costs and worsening supply chain disruptions in the wake of the Red Sea crisis. The latest lengthening of suppliers’ lead times was the greatest recorded since July 2022."
  • "The latest survey indicated that private sector firms remained cautious about adding to their staffing numbers. Total employment levels increased only slightly in February and the pace of job creation was unchanged from the previous month, despite improving order books and rising business optimism. In the manufacturing sector, workforce levels decreased to the greatest extent since June 2020."
  • "Average cost burdens increased sharply in February and at the fastest pace for six months. Reports from survey respondents suggested that higher labour costs remained the main factor pushing up business expenses, especially in the service economy. Manufacturers often reported rising freight costs during February, linked to the Red Sea crisis, but the latest overall increase in purchasing prices was only modest and slightly softer than in January."
  • "Mirroring the trend for input costs, latest data indicated a renewed acceleration in prices charged inflation across the private sector economy. The increase in output charges was the steepest since July 2023 and led by another month of robust prices charged inflation among service sector companies."
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Significant news in the UK PMI release. In contrast to the flash French, German and EZ releases there is a rise in input prices and lenthening of suppliers lead times to the greatest extent since July 2022. However, even more significant is that labour service costs remain high and this is leadin to a "renewed acceleration in prices charges" across the private sector. This will be a concern for the MPC - and should push back further expectations of an early cut.
Highlights from the press release:

  • "Manufacturers recorded only a modest rise in their input prices, despite higher shipping costs and worsening supply chain disruptions in the wake of the Red Sea crisis. The latest lengthening of suppliers’ lead times was the greatest recorded since July 2022."
  • "The latest survey indicated that private sector firms remained cautious about adding to their staffing numbers. Total employment levels increased only slightly in February and the pace of job creation was unchanged from the previous month, despite improving order books and rising business optimism. In the manufacturing sector, workforce levels decreased to the greatest extent since June 2020."
  • "Average cost burdens increased sharply in February and at the fastest pace for six months. Reports from survey respondents suggested that higher labour costs remained the main factor pushing up business expenses, especially in the service economy. Manufacturers often reported rising freight costs during February, linked to the Red Sea crisis, but the latest overall increase in purchasing prices was only modest and slightly softer than in January."
  • "Mirroring the trend for input costs, latest data indicated a renewed acceleration in prices charged inflation across the private sector economy. The increase in output charges was the steepest since July 2023 and led by another month of robust prices charged inflation among service sector companies."