The Purchasing Managers Index (PMI) for Swedish manufacturing rose in August to 56.1 from 55.7 in July. The index has thus remained above its historical average for the fourteenth consecutive month.
– “Swedish industry continues to show robust growth, but the results from recent months suggest stabilization at a high level rather than a further strengthening of the industrial economy,” says Jörgen Kennemar, head of purchasing managers’ index analysis at Swedbank.
Three of the PMI’s five sub-indices contributed positively to the overall PMI in August. Production made the largest positive contribution, followed by employment and a decline in inventories of purchased materials. New orders accounted for the largest negative contribution, but shorter delivery times also held back the overall PMI. The index for suppliers’ raw material and input prices rose in August to 75.4 from 67.2 in July, indicating that cost pressures are increasing in the manufacturing sector.
“The mounting cost pressures mean that industrial companies are facing ever-greater challenges from higher raw material prices and disruptions in global supply chains. If this trend continues, there is a growing risk of both squeezed margins and higher inflationary pressures going forward,” says Kennemar.
The Purchasing Managers’ Index for manufacturing (PMI-total) rose by 0.4 index points to 56.1 in August, thereby exceeding its historical average of 54.3 for the fourteenth consecutive month. This indicates that the Swedish manufacturing sector continues to show robust growth. However, the trend over the past three months points more toward stabilization than further strengthening of the economy. The composite PMI averaged 56.6 from June through August, compared with 56.8 during the immediately preceding three-month period. This slowdown should, however, be interpreted with some caution, as it is primarily explained by the fact that the delivery time index has fallen back after the sharp rise seen this spring. Shorter delivery times may be a sign of easing supply disruptions rather than a weaker industrial economy.
The global manufacturing sector is also improving and shifting more toward Europe. In the eurozone, the preliminary PMI index rose to 53.2 in August—the highest level in four years—with Germany as the main driver. At the same time, manufacturing activity is slowing in the U.S. and the U.K. The Chinese PMI index from Caixin, which covers the country’s smaller and privately owned manufacturing companies, remains in expansionary territory but is failing to gain momentum and is being challenged by weak domestic demand.
The Purchasing Managers Index (PMI) is an economic indicator for the Swedish economy conducted in collaboration between Swedbank and Silf for both the manufacturing industry and the service sector. The goal of the PMI is to quickly gauge current economic conditions. Each month, economic data is collected from purchasing managers who are part of a survey panel. An index reading above 50 indicates growth, while a reading below 50 signals a decline.
