Wednesday, September 7, 2011

Global Purchasing Managers Indexes

The 4% jump in Germany’s industrial production during July was very good news. But it was also old news. Germany’s manufacturing purchasing managers index (M-PMI) fell to 50.9 in August, the lowest reading since September 2009 and well below the most recent cyclical peak of 62.0 during April. The other major M-PMIs all confirmed that global manufacturing growth stalled in August. We construct a Global M-PMI by averaging the indexes for the US, the UK, the Eurozone, and China. This super index fell to 49.9 in August from 50.3 in July. It is down from the most recent cyclical peak of 58.4 during February.

Does this mean that the global economy is on the verge of double dipping? I don’t think so. Rather, I expect that M-PMIs may continue to fluctuate north of 50 over the rest of this year into next year. Keep in mind that the PMIs are diffusion indexes. That means they cycle. Readings of 50 mean that most purchasing managers are saying that business was as good this month as it was last month.


Meanwhile, purchasing managers in nonmanufacturing industries remain relatively upbeat. The Global NM-PMI was 53.4 in August. That’s down from 54.8 in July, and the recent cyclical peak of 57.9 during March. But it is solidly above 50.

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