Economy in Brief: August 2022

The manufacturing PMI gauges weakened broadly in July as there was improvement in only 16% of them in the table, a group consisting of 18 significant international manufacturing centers. This follows June where 22% of the categories improved month-to-month and May when 39% of the categories improved month-to-month. Monthly improvement is becoming less common.

Viewed over broader horizons, over three months 22% of the categories improved, over six months 22% of the categories also improved, and over 12 months, 28% of the categories improved. The three-month calculation compares three-month diffusion to the average over six months, the six-month comparison is to the average over 12 months while the 12-month comparison is to the average of 12-months ago.

The erosion is somewhat slow as over three months the median manufacturing PMI reading is 52.1 compared to a median of 52.9 over six months and of 53.2 over 12 months. On a monthly basis, the median the PMI for this group is at 50.6 in July, down from 52.1 in June, and 53.7 in May. The slippage is steady, but so far it is not severe

However, this ongoing weakness has taken a toll. The queue standings, that look at the current PMI readings by country ranked over the last four and a half years, show standings below the 50% mark (which denotes the median in each case) for all except 6 reporting countries. The median rank standing on this timeline is the 32nd percentile, which puts the median in the lower one-third of all medians in the last four and a half years. These are weak numbers. Still, we also can contrast the rank standings to the position of the current readings in their high low range for the same period. On that basis, there are only two observations, Germany and Taiwan, that are below the midpoints of their respective high-low ranges. The average percentage standing in the range is at its 65th percentile which is a moderately firm standing above the midpoint.

Looking at performance of the manufacturing sector for this group since COVID struck in January 2020, we find the average change in the manufacturing PMI on that timeline is 1.5 points. It tells us that essentially the PMIs are back to a slightly higher level than they occupied before COVID struck in January 2020.

Table 1