Haver Analytics
Haver Analytics
Global| Sep 23 2024

Flash Global PMIs Fade Broadly in September

September PMI readings faded across the board. Composite PMI readings fell in each of the seven early reporting entities. In fact, PMIs fell for all composites and services readings generating showed only a single increase for manufacturing in September - that was in France. Among the 21 composite and sector readings in August, 12 had improved, the same as in July. The September result is a watershed change compared to the last two months, where although data still were mixed, they favored improvement.

With the turnabout in September not even included, the sequential readings are souring (the sequential averages are presented only on finalized data). The three-month averages (through August) still only show improvement in six of twenty-one composite and sector readings. That is a sharp shift from the six-month change where the averages improved broadly compared to the 12-month averages, declining in only five composite and headline readings. Over 12 months conditions broadly improved compared to a year ago, with only eight composites and sectors showing a worsening.

The queue percentile rankings are mostly below the 50% mark that reflects the median for the period of ranking back to January 2020. The ranking exceptions are India where the composite and both sectors rank above their respective medians, the United Kingdom, where the composite is above a 50% ranking, and the United States, where the composite and the service sectors have above-median rankings. Still, for the U.S., the U.K. and India, all readings weakened this month. For the U.S., the manufacturing reading is exceptionally weak at an 8.8 percentile standing, tied with Germany for the second lowest standing in the group.

As an indicator of how troubled the global economy has been in this group of advanced countries plus India, of the 21 composite and sector rankings for the group, 12 of them show weaker readings in September than in January 2020. As we noted above, few are above their period median values based on ranking statistics.

For this group of respondents, the average composite ranking is 42.9, the average manufacturing reading is 23.6 and the average service sector reading is 50.6. It is the service sector that has been providing the backbone for sustaining growth while manufacturing has been severely impaired.

The September readings are not a good sign and are especially nettlesome with central banks largely facing excessive inflation but trying to sustain expansion as they extend the inflation fight. Inflation has stopped falling fast and it is either falling more slowly or misbehaving, in both cases, given central bankers fits. Easing cycles have started everywhere except Japan (that has not contributed early flash PMI data yet). The Federal Reserve in the U.S. just cut rates and while the BOE had begun to cut rates earlier, even now when faced with weak economic data, it has passed on another rate cut because of inflation concerns. In the U.S., the federal reserve is ‘looking through’ ongoing excess inflation and projecting declines ahead to justify rate cuts with inflation still over target for a period of over 40 months.

War between Russia and Ukraine continues to churn out global distortions, and stepped-up hostilities in the Middle East further complicate confused global dynamics.

  • Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media.   Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.

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