Economy in Brief

The S&P Global manufacturing PMIs continue to show slippage for worldwide manufacturing. The chart highlights three main areas: China, the United States, and the euro area. Each of these areas shows consistent slippage from early-2021 onward and for China a bit longer.

The two tables below show manufacturing PMI readings and summary data for 18 countries in April. Half of them show worsening in April and half of them show improvement. This is an improvement from March when 12 showed month-to-month weakening; it compares to February when seven showed month-to-month weakening. Those statistics mark this as a period of unevenness tending to weakness.

Over three months compared to six months, 12 members in Table 1 show weaker results. Over six months compared to 12 months, 11 members in this table show weaker results. However over 12 months compared to 12 months ago, only 5 show weaker conditions. These five are China, Brazil, Malaysia, Vietnam, and Turkey, a selection of developing economies.

There are 7 reporters and the table with manufacturing percentile standings (cast form data back to January 2018) that are below their medians; these are identified by any queue standings that reside below their 50% mark. Countries in this situation include Germany, China, Russia, Brazil, Taiwan, Vietnam, and Turkey. Countries with queue percentile standings high in their respective ranges are led by Malaysia with a 90.4 percentile standing, followed by the U.S. with an 86.5 percentile standing and Japan with 82.7 percentile standing.

Table 1 also evaluates manufacturing sectors for their strength since COVID hit. The final column of the table shows the change in manufacturing PMIs from January 2020. On this timeline, Germany and the euro area had the two strongest gains, followed by the U.S., the U.K., and Canada that also have relatively strong gains. However, there are still four countries in the table that show net declines on this timeline. China leads them, with a decline of 5 points, Turkey with a decline of 2.1 points and declines by manufacturing in India and Taiwan.

The 18 countries in the table show the queue percentile standings average 58.9 percentile which is a reasonably firm but not a particularly strong reading. If we position them on this timeline between their respective high and low values, they stand relatively higher in their range than in their queues with a 74.3 percentile standing on average.

At today's meeting of the Federal Open Market Committee (FOMC), the Fed announced that it will raise the target for the Federal funds rate to a range of 0.75% - 1.00% from 0.25% - 0.50%. It placed the rate at the highest level since March 2020. The move was as expected in the Action Economics Forecast Survey.

The Fed also "anticipates that ongoing increases in the target range will be appropriate."

The statement indicated that, "Although overall economic activity edged down in the first quarter, household spending and business fixed investment remained strong. Job gains have been robust in recent months, and the unemployment rate has declined substantially. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures."

It also stated, "The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The implications for the U.S. economy are highly uncertain. The invasion and related events are creating additional upward pressure on inflation and are likely to weigh on economic activity. In addition, COVID-related lockdowns in China are likely to exacerbate supply chain disruptions. The Committee is highly attentive to inflation risks."

In addition, the Fed will begin reducing its $9 trillion portfolio of Treasury securities and agency debt and agency mortgage-backed securities on June 1.

Today's action was endorsed by each member of the FOMC.

The statement issued following today's meeting can be found here.