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Economy in Brief

Manufacturing PMIs Make Progress
by Robert Brusca  December 1, 2021

Most PMIs in Table 1 improved month-to-month with 10 entries in the table showing increases and 7 worsening. However, trending characteristics are not yet fully positive as over three months only seven entries show an improving trend and the same is true over six months. Over 12 months, compared to 12 months ago, only China fails to show improved performance.

The queue standings (or percentile rankings) of this month's manufacturing PMIs shows five with PMI standings in the top 10 percentile of their historic (5-year) queue of data (standings of 90% or more). Only China and Brazil have PMI standings in the lower 15 percentile range. The median ranking is at its 76th percentile, a rather solid reading overall.

Looking at PMI changes since the Covid outbreak began (using January 2020 as a base), all countries show manufacturing PMI improvement on that timeline except China and Brazil. However, the high-income countries have enjoyed the most expansion: the euro area, Germany, France, the U.S., the U.K. Canada, and Japan have averaged a change of 7.8 points on this period. The remaining ten countries average gains of only 1.8 points since January 2020. Indonesia's 4.6-point gain is the bests of that lot.

Table 1

Table 2 arrays countries according to the level of their manufacturing PMI readings. In November 44.4 of the countries have readings in their 50 to 55 range. But only 16.7% lie in their 40 to 50 range. At the same time, 38.9% of them lie in the upper 55 to 60 range. Looking at data from three-months to six-month to 12-months, we find that the percentage of countries with PMIs in the 50-55 range has risen as has the percentage of countries in the 55 to 60 PMI range. These current readings are strong compared to a year ago, as well as when compared to the year before that and when compared to the four-year average.

These data show that manufacturing has made a substantial recovery and is on solid ground. However, the table makes it clear that some have recovered better than others and some countries are still in need of making more progress.

Manufacturing conditions are looking quite good

Table 2

Of course, there are still virus issues. There has been a new wave of Delta infections and now there is a new variant, Omicron, whose characteristics are mostly unknown but whose impact is feared. The road ahead will depend importantly on what Omicron turns out to be and whether it continues to be treated effectively with existing medical technology or not.

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