Global Purchasing Manager Indices, Update December 17

Published on December 20, 2012

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George Dorgan
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Manufacturing PMIs are considered to be the leading and most important economic indicators. Since the Fed’s QE3, this is the third month of improvements in global PMIs after a strong slowing in summer 2012.

January 25th

Expansion-contraction ratio: There are as many countries that show values above 50 as under 50.

Positive-negative-change ratio: 18 countries showed better values than the previous month, whereas only 11 had weaker ones.

Since the Fed’s QE3, this is the third month of improvements. The United States and Mexico are leading with Markit PMI of 54.2 and 54.9. According to the ISM report, however, there is a lag, production is positive, but employment is weak, which is the opposite of the Markit report for the US.

(click to expand)

Long-time overview

China and other emerging markets came far more quickly out of the 2008/2009 recession. During 2009 and 2010, the Fed fueled the Chinese, Brazilian and other emerging markets’ recoveries and housing bubbles with cheap money. The Chinese government helped with a huge investment program. Due to the depressed housing market, the US could not recover that quickly.

In 2010/2011, Germany and the Euro zone followed the Chinese expansion thanks to strong German exports, but in 2011 rising gas and falling home prices caused the United States to slow down.

The explosion of the euro crisis and the upcoming austerity radically stopped the European expansion in the second half of 2011. European PMIs fell from 57 to 47 in a couple of months. The United States was not impressed by the euro crisis at all, but thanks to cheaper gas prices and the flow back of funds into the US, they recovered at the end of 2011. From April 2012 onwards, all global economies were weakening. This tendency could be stopped by the liquidity injection from global central banks in September 2012.

Global PMIs December 3, 2012 - Click to enlarge

JP Morgan’s global PMIs vs. different risk indicators

Services are an important part of the economy, which are not contained in the PMIs above. JP Morgan’s global PMIs show the combined global manufacturing PMIs, of services PMIs and a composite of manufacturing and services. The combination is made up through different weights per country.

After the strong improvements in the manufacturing PMIs in 2010 and 2011 potentially fueled by quantitative easing, it is now the turn for the services PMIs to outpace manufacturing PMIs.

(Click for details inside the table)

Month	Manu factur.	Services	Com posite	Michigan Consumer Confidence	S&P 500	Copper	Brent Oil	AUD/ USD	Reference date
August 2013	51.7	56.1	55.2	82.1	1645	3304	115.70	0.9053	Sep 3, 2013
July	50.8	54.9	54.1	85.1	1703	3168	108.93	0.8903	August 2, 2013
June	50.6	51.3	52.9	84.1	1615	3176	105.85	0.9116	July 3, 2013
May	50.6	53.7	53.1	84.5	1640	3297	99.92	0.9750	June 3, 2013
April	50.4	52.1	51.9	76.4	1582	3126	102.85	1.0253	May 3, 2013
March	51.2	53.2	53.1	77.6	1554	3354	107.17	1.0424	April4,2013
February	50.8	53.3	53.0	73.8	1525	3508	110.08	1.0202	March4,2013
January	51.5	53.4	53.3	71.3	1503	3658	113.46	1.0427	Feb4,2013
December 2012	50.2	54.8	53.7	74.5	1461	3700	111.42	1.0481	Jan 5, 2013
November	49.7	54.9	53.7	82.7	1407	3656	110.92	1.0432	Dec 3
October	49.2	52.1	51.3	82.6	1423	3557	105.75	1.0338	Nov 3
September	48.9	54.0	52.5	78.3	1437	3775	108.07	1.0231	Oct 3
August	48.1	52.3	51.1	74.3	1406	3485	108.07	1.0239	Sep 3
July	48.4	52.7	51.7	72.3	1361	3307	106	1.0465	Aug 2
June	48.9	50.6	50.3	73.2	1357	3466	97	1.0230	Jul 2
May	50.6	52.5	52.1	79.3	1263	3289	98	0.9640	Jun 3
April 2012	51.4	52.0	52.3	76.4	1402	3782	116	1.0260	May 2, 2012
September 2011	49.9	52.6	52.0	55.7	1123	3132	102	0.9634	Sep 2, 2011
February 2011	57.8	59.3	57.0	77.5	1331	4498	115	1.0127	Mar 2, 2011

sources:

Business Insider Dec 3

Business Insider Nov 1

Business Insider Oct 1

Business Insider September 3

Prices: Bloomberg, Investing.com

Next page: Which indicators are the leading ones?

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About George Dorgan

George Dorgan (penname) predicted the end of the EUR/CHF peg at the CFA Society and at many occasions on SeekingAlpha.com and on this blog. Several Swiss and international financial advisors support the site. These firms aim to deliver independent advice from the often misleading mainstream of banks and asset managers. George is FinTech entrepreneur, financial author and alternative economist. He speak seven languages fluently.

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Guest Commentary: The Trade of the Year: Short USD/JPY | AnyOption Review – Binary Options

2013-01-08 at 17:24 (UTC 2) Link to this comment

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[…] With falling real wages and low consumer spending, the Fed is in a comfortable position as for inflation pressures. Therefore, in August and September, central bankers were able to do the most desperate measures ever, QE-indefinite and implicit state financing via ECB’s OMT, for now with success, even if most globalpurchasing manager indices are still contracting. […]