The Q1 2012 results show a welcome improvement, after the disappointing figures for Q4 2011. Almost all the key national balances have strengthened in Q1, for both manufacturing and services, and are now much stronger than during the worst phase of the recent recession. But most national balances, in both sectors, remain below their pre-recession levels of 2007. The service balances have improved by less than those of manufacturing in Q1, and most service sector balances are still relatively weak by historical standards.

The cashflow balances remain weak and signal potential financial problems that are a cause for concern.Manufacturing cashflow is barely positive and the service sector’s balance is still in negative territory. Concerns over inflation have eased considerably in Q1, for both manufacturers and service firms, but recent renewed increases in oil and food prices may alter future perceptions.