Manufacturing PMIs Give Little Hope

The overall September Purchasing Managers Survey for manufacturing improved slightly from 48.07 in August to 48.96 in September.  (Values above 50 represent expansion while values under 50 represent contraction.)  Most countries experienced an increase in their PMIs in September, but most remained below the 50 mark, notably China, Brazil, the Euro Area as a whole and  France, Germany, Spain, Greece and Italy in particular. These are shown in the first chart.  Among those countries whose PMIs were above the 50 mark were India, Russia and Turkey as shown in the second chart.  The PMI in the US also increased in September, but only marginally, from 51.03 in August  to 51.12in September.  The PMI in the other major economy, the UK, declined 1.14 points from 49.51 in August to 48.37 in September.

The manufacturing PMIs are good indicators of future trends in Industrial Production. The September data suggest there are likely to be more declines in industrial production than increases in the coming months and that the global economy is not yet out of woods.

Weekly Price 07/09/12 07/02/12 Manufacturing PMIs Sep '12 Aug '12 Russia 52.37 50.97 Turkey 52.16 49.99 India 52.80 52.78 China 47.86 47.62 Brazil 49.81 49.35 Euro Area 46.14 45.08   Spain 44.55 44.05   Italy 45.73 43.61   Greece 42.18 42.05   France 42.73 46.03   Germany 47.43 44.65 United States 51.12 51.03 United Kingdom 48.37 49.51