Global| Nov 01 2006PMI Surveys Hint at Slower Growth in Several Countries
Summary
Purchasing Managers surveys for a number of large countries indicate a modest slowing of manufacturing growth through October. Changes from September are not big, but most are in the same direction and the overall indexes are [...]
Purchasing Managers surveys for a number of large countries indicate a modest slowing of manufacturing growth through October. Changes from September are not big, but most are in the same direction and the overall indexes are reinforced by moves in the key new orders component.
In China, the total index is down 0.3 point, and at 52.15, indicates growth is still spread across a good portion of reporting companies, although it is not broadening. New orders remain firm, although down fractionally from September. More notable is a slowing of outstanding orders -- backlogs -- to 49.78, just below the 50% threshold of expansion. In light of continuing growth in new orders, the decline in backlogs may only reflect strengthening productivity, but even so, it does appear that overall momentum is waning.
Russia's manufacturing sector actually appears stronger, although the latest months have diminished more than in China. Overall activity, according to the Purchasing Manager measure, had a reading last month of 53.05, down 1.65 points from September. New orders, which run consistently higher than the composite index, slipped 2.5 points to 56.82. In August both of these reached their highest levels since 1999. So the easing in September and October may only be a correction. Backlogs in Russian factories have actually strengthened since early 2005 along with the good gains in new orders. But they too corrected in October back below 50%.
The Indian economy's service sector has received more publicity in recent years, but its manufacturing industries are experiencing broad expansion as well. The overall PMI was 59.30 in October, up from September's 59.00 reading. These data are very new, beginning only in April of last year. But certainly their behavior is internally consistent. Strong new orders, evident in the graph, are pulling up backlogs, which rose 0.63 point in October to 52.68, their highest level. So momentum in Indian manufacturing looks quite vigorous.
In the long-established UK manufacturing sector, the overall index eased 0.78 point to a still firm level of 53.73, as industry there continues a year of good expansion. However, what we see in the last graph is that output is gaining as fast as new orders, so that backlogs look weak. This suggests that while overall growth is good now, it is vulnerable to any orders slowdown going forward.
| PMI Indexes, SA | Oct 2006 | Sept 2006 |
|---|---|---|
| China | 52.15 | 52.45 |
| New Orders | 53.02 | 53.39 |
| Backlogs | 49.78 | 50.56 |
| Russia | 53.05 | 54.70 |
| New Orders | 56.82 | 59.34 |
| India | 59.30 | 59.00 |
| New Orders | 66.29 | 65.17 |
| UK | 53.73 | 54.51 |
| New Orders | 54.72 | 55.00 |
| Memo: US | 51.2 | 52.9 |
| New Orders | 52.1 | 54.2 |
Carol Stone, CBE
AuthorMore in Author Profile »Carol Stone, CBE came to Haver Analytics in 2003 following more than 35 years as a financial market economist at major Wall Street financial institutions, most especially Merrill Lynch and Nomura Securities. She has broad experience in analysis and forecasting of flow-of-funds accounts, the federal budget and Federal Reserve operations. At Nomura Securites, among other duties, she developed various indicator forecasting tools and edited a daily global publication produced in London and New York for readers in Tokyo. At Haver Analytics, Carol is a member of the Research Department, aiding database managers with research and documentation efforts, as well as posting commentary on select economic reports. In addition, she conducts Ways-of-the-World, a blog on economic issues for an Episcopal-Church-affiliated website, The Geranium Farm. During her career, Carol served as an officer of the Money Marketeers and the Downtown Economists Club. She has a PhD from NYU's Stern School of Business. She lives in Brooklyn, New York, and has a weekend home on Long Island.
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