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Good news on the surface, but a very worrying forecast.
Lets review the good news first! The Purchasing Managers Index remained at 58 for a second consecutive month in May (it stood at 45 last May – the highest reading at that point since April 2008) as UK manufacturing rebounds on the back of a continued buoyant export demand, and inventory re-stocking. Employment levels also rose for a second month in a row after almost two years of job cuts.
In terms of interim manufacturing assignments, Q2 activity mirrored the manufacturing rebound, with a good increase in the number of new assignments after a very quiet Q1. These have almost exclusively been in the Finance and Operations areas and although day rates remain under pressure, I’m seeing a much higher percentage of interim managers reporting that they are currently engaged compared to 12mths ago.
Great news all round – something we’ve all been waiting for, for a long time!
Now the bad.
The speed of deterioration in the Southern Eurozone to the point that it’s now a case of when Greece leaves the Euro, was unthinkable even 3 weeks ago. We all know what this means – the inter bank rate is already back up at levels last seen before the onset of the credit crunch. I had hoped this outcome had been at the very least postponed after Germany supported the emergency package, but I fear the market’s have decided otherwise and I’m pessimistic that the Eurozone can recover.
A second piece of news out today, and to my mind key, is regards US commodity prices. Their index of 18 industrial materials fell by an astonishing 57% in May, the biggest fall since October 2008. This is a worrying indication that growth forecasts will almost certainly be revised downwards later this year – and not just for the US.
In summary, short term I think demand will continue, but it’s likely to be patchy and continue to be frustrating for many interims as competition remains fierce. Longer term, who knows – as we’ve seen from Greece, sentiment can swing wildly between extremes and whilst the current outlook is not good it’s been worse.
With the drop in commodities and oil, at least pump prices may give us something to smile about in due course!
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July 17th, 2010 at 1:05 pm
I have read it and I agree with it