Markit/CIPS Composite PMI

The S&P Global / CIPS UK Composite PMI (Purchasing Managers' Index, a business survey) gauges monthly UK private sector output direction. Its headline is the Composite Output Index, sometimes called the Composite PMI, with composite records since January 1998. It polls senior purchasing managers at around 650 manufacturers and 650 service firms, chosen to mirror GDP (gross domestic product, total economic output). It blends manufacturing output and covered services into a 0 to 100 diffusion gauge of breadth, not official output, where 50 means no change.

Responses are usually collected in the middle 2 weeks of the month, with firms comparing mid-month to mid-month conditions. Flash appears around the 22nd to 24th at 09:30 under embargo; manufacturing final is around the 1st of next month, services plus composite days later. Flash prints composite output, services activity, manufacturing output and manufacturing PMI; finals add orders, jobs, prices, backlogs, exports, expectations and commentary. Flash uses 80 to 90% of replies and is superseded; answers are never revised, but seasonal adjustment (smoothing for calendar patterns) can revise series.

The composite moves only with its 2 output parts, while other survey gauges give context on demand, jobs and prices.

• Manufacturing Output Index: captures change in factory output volume versus 1 month ago.
• Services Business Activity Index: captures change in services activity volume versus 1 month ago.

During April 2020 lockdown, flash composite fell to 12.9 from 36.0 in March. That was the lowest since the series began in January 1998, below 38.1 in November 2008, and the largest drop on record. About 81% of services firms and 75% of makers reported lower output, with hotels and restaurants halted while only medical and food producers grew.

The publisher judged factory output by its output index, not headline manufacturing PMI, since delivery delays and stocks blurred pure production. A nonlinear model linked the reading to about a 7.0% quarterly GDP fall, warning it excludes most self-employed and retail.

1. Panel: Survey draws around 650 manufacturers and 650 service firms, stratified by sector and workforce size using official GDP shares.
2. Questionnaire: Each firm reports whether output (volume terms) is higher, same or lower than 1 month ago, with reasons.
3. Response weighting: Replies are weighted by sector and company size shares in sector gross value added (GVA, each sector's contribution to output).
4. Diffusion index: Index equals % reporting higher plus half % reporting same; 50 means no change, 0 means all lower and 100 means all higher. For example, 35% higher, 45% same and 20% lower gives 35 + 0.5 x 45 = 57.5, signalling expansion.
5. Composite weighting: Composite averages manufacturing output and services activity using official annual value added shares; headline manufacturing PMI is not used. For example, 25% weight on 57.5 and 75% on 45.0 gives 48.1, so services contraction dominates.
6. Seasonal adjustment: Indices are seasonally adjusted with Census X-12 ARIMA and an in-house method; headline figures use adjusted series.
7. Flash cut: Flash applies the same steps to about 80 to 85% of replies and is later superseded by final results.