The chart shows manufacturing PMIs across many of the more important countries in the world, the rightmost column, May 2014, is the preliminary data released in the last week of May. While manufacturing in the developed world is not what it once was, at Astor our sense is that the business cycle tends to play out first in the manufacturing sector, and tends to spread to the service sector later. Hence, we keep a close eye on the PMIs. Our impressions of the current situation:
- US manufacturing continues to be a bright spot in absolute terms and steady at higher levels than a year ago.
- On the whole, Europe is much improved compared to the previous year. The UK seems to be holding strong a high levels and the Eurozone countries seem to be, for the most part, much improved over last year with positive.
- Asia is an area of concern. While China’s PMI is up slightly over the previous three months, it is still at a low level as are many of the countries in the region. Most of the rest of the region appears to be decelerating. Australia’s drop stands out, but we are guessing it will be partially reversed.
- The rest of the emerging world paints a picture of modest expansion.
We will update if the picture changes with the release of the final numbers next week.
John Eckstein