Composite PMIs Mostly Improve

Composite global PMIs in February show more widespread improvement than deterioration. Only 6 of 24 reporting jurisdictions show composite PMIs below 50 indicating contraction. Only 36% of the reporters are slowing in February, month-to-month; that compares to 40% in January, and 36% in December.

If we look at the average tendencies over three months, six months, and 12 months, we see that the number of jurisdictions contracting varies between 7 and 10 over these three horizons. Looking at the tendency for slowing over 12 months 56.5% of the reporters slow compared to 12-months ago, over six months 87% slow compared to their values over 12 months, and over three months only 30.4% slow compared to their values over six months. There's a clear tendency for global composite PMI readings to improve.

The data show that the advanced economies are most uniformly getting better; the most advanced economies are the top panel of the table. Of the six jurisdictions, five of them are getting better in February, six are getting better in January. Over three months all six of them are getting better and this is after all six of them worsened over six months.

However, there is also more consistent weakness among the developing economies particularly for the Monetary Union, for Germany, and for France. For those 3 jurisdictions, the readings are persistently below 50 over the last three months as well as over three months on average, six months, and 12 months. Italy has some sporadic readings below 50; Spain keeps its composite readings above 50 on all those timelines; the U.S., also among the advanced economies, has readings above 50 on all those horizons. The only other group that shows the preponderance of readings below 50 is a scattering of countries in Africa: Zambia, Egypt, and Kenya.

The queue standings that rank these current standings over data from the last four years show persistent positive rankings below the 50th percentile for four of the six advanced economies in the top panel; these include the U.S., the Monetary Union, Germany, and France. Again, only Africa has a clustering of values that are below the 50-percentile mark and those include Zambia, Ghana, Egypt, and Nigeria. Qatar, a Middle Eastern nation, also has a standing below its 50th percentile.

Groupings of countries show the overall averages have been slightly improving over the last three months logging an average of 52.0 in February. The medians have been improving as well and the group median logs a value of 51.3 in February from 12-months to three-months to six-months. The progression is mixed for the average and there is increased weakness on that timeline for the median.

On balance, the global composite PMI readings are getting better and they show fewer countries and regions with PMI readings below 50 (a reading level which puts them below their median for the period when it occurs). However, advanced nations and African nations are still struggling on a composite basis with composite standings below 50.

This is an interesting development with inflation declining. Central banks have finally gotten their arms around the inflation problem even though inflation rates continue to run over the top of the target in those monetary center countries that have targeted inflation. We can wonder if the pickup in growth is going to slow or stop the inflation progress that has been in train. In the U.S., while there are still widespread expectations of rate cuts from the Federal Reserve this year, there's also evidence that inflation progress has slowed and even some hints that inflation might be reaccelerating as growth in the U.S. has proved quite resilient. This brings the interplay between inflation and growth back to the forefront.