PMIs Are Flat or Better in April, But Trend Remains Flat

EMU Shows Some Services Upswing, But still Is Range-bound The PMI data for April from S&P Global shows a mixed performance that tends toward strengthening except for the United States. U.S. data in April show a weaker composite, a weaker manufacturing sector, and a weaker services sector and these three readings were also weaker month-to-month in March in the United States. The other seven countries reporting on the table show stronger data for April and while a bit more mixed strengthening in March as well. On average, the monthly data from February to March to April show the composite readings creeping higher. Manufacturing ratings move higher in March compared to February and then stall in April. For services, there is a steady progression of stronger service sector numbers from February to March to April.

Sequential data are far more equivocal with the average Composite Index at the same level over three months as it is over 12 months. The manufacturing reading is a tick higher at 47.7 over three months compared to 47.6 over 12 months. The services reading is slightly lower on average over three months at 51.3 compared to its 12-month average of 51.5.

The PMI this month highlights conflicting trends with the February-to-March-to-April data showing an upswing while the averages from 12-months to six-months to three-months show flatness to slight weakness. On balance, it's not the improving picture that we'd hope to see at this point.

The queue percentile standings data place the April flash data in a four-year queue of observations and viewed in that way the average for the Composite Index is at 62nd percentile, the average for manufacturing is at the 38th percentile and the average for services is at its 67.6 percentile. The services sector is barely inside of the top third of its 4-year historic range for this. Manufacturing at a 38-percentile standing is a good ten percentage points of percentile standing points below its median.

Of course, they're very different experiences across countries. India has the strongest performance with rankings in the 90th percentile for the composite, manufacturing, and services. Japan has firmed showing strong standings with the composite ranking in its 87.8 percentile and a services sector in its 91.8 percentile. But Japan’s manufacturing is still only in its 51st percentile. Japan and India are the only two countries that have manufacturing percentile standings above their respective medians (above the 50th percentile mark). Manufacturing in the euro area as a whole has a 22.4 percentile standing, Germany has a 16.3 percentile standing, and France has a 16.3 percentile standing. Manufacturing remains a weak sector in the global economy. India is benefiting from some relocation activity from some of the businesses leaving China.

The table also presents data and changes from just before COVID struck using January 2020 as a base. On that comparison, Germany, France, and the U.S. have weaker composite readings than they had four years ago. The European Monetary Union has a higher reading but only by 0.4 points, on its composite diffusion index. India's composite is higher by 6.1 points, Australia is better by 5 points, Japan is better by 2.5 points, and the U.K. is better by 1.7 points. None of these are very remarkable increases over a period of four years, but the statistics for India and Australia are quite respectable.

The global economy continues to struggle. While central banks seem to have started on a rate cutting cycle, the Federal Reserve has stepped back from its ‘plan’ to cut rates as inflation in the U.S. has stopped falling and started rising on a short-term basis. The European Monetary Union is still expecting the ECB to cut rates around mid-year. Japan, contrarily, is expecting to raise rates. And since inflation progress in the U.K. has stalled out, it's not clear where U.K. monetary policy is headed.