Economy in Brief

Manufacturing PMIs in September worsened for all the countries in the sample except for China and South Korea. The diffusion calculation was 11% in September but that compares to 83% in August and 55% in July; in past months improvement was much more common. Comparing the sequential results of 12-months to 6-months to 3-months, the median over 12 months is 49.2, over 6 months it's 48.8, and over 3 months it's 49.3. These are not compelling numbers in any direction and they show that output in manufacturing is simply hovering in a very slightly contractive position to 12-months ago.

The diffusion calculations that compare 3-months to 6-months, 6-months to 12-months across countries are steady at 66.7%. All those horizons regularly show improvement for two-thirds of the reporting countries over each of those horizons.

The queue rankings, however, indicate there's still a great deal of weakness with ten of the reporting countries having PMI readings since January 2021 that are below their respective medians. Output is above the respective medians for eight countries.

The bottom of the table presents statistics grouped in different ways a grouping of developed countries, the BRICs, other Asia. On that basis, there's really not much discrimination except that the BRIC countries show average readings that for the most part are above 50; other comparisons for the most part are below 50. The statistics, though, clustered around 50. The global medians call PMI values below 50 while the global averages coalesce at readings slightly above 50. And while these are differences, there's not much distinction between these differences.

In addition, we know that the queue rankings show a great deal of weakness in the current percentile standings which also leaves us with the conclusion that manufacturing is not particularly robust.

There are five countries or areas showing sequential improvement from 12-month to six-month to three-month averages and there are five of them showing sequential weakening on the same time horizon. In both cases, the transitions are small.

The European Monetary Union indexes for September showed slight uptick to 95.5 from 95.3 in August. However, at 95.5 the September reading was still below the July reading of 95.8, but it was above the June reading of 94.2. EU sentiment indexes have been moving sideways since the end of 2022 without much trend.

All the components except for construction rank and roughly their respective 20th to 30th percentiles of their historic queues of data. The exception is construction, where the sector has a 74.6 percentile standing and retailing with a nearly 46-percentile standing, leaving it marginally below its median. However, the industrial sector ranking is at its 26-percentile, services rank at their 27th percentile and consumer confidence is at its 20th percentile. On the whole that’s a collection of quite weak readings: one firm, one marginal and three weak.

Compared to January 2020 before COVID struck, all the sectors and the aggregate index are lower by about 8 to 10 points over the five-and-one-half-year period. The exception is the industrial sector, which is lower by only five points.

National sentiment monthly showed eight declines in September, compared to seven declines in August and only five month-to-month declines in July.

The sector rankings for large country industrial sentiment shows they're all ranking below 50% except for Spain. Spain also has the only above 50-percentiel standing for consumer confidence at a strong 96.5 percentile. Retailing has two of the large economies ranking above 50%: Italy and Spain. No service sector readings for the large economies are even close to neutral. Construction, however, ranks above the 50% mark in three of four large economics and in France, where it falls short and has a ranking that is still at its 45th percentile. Weakness is broadly shared across EMU sectors for the large and small alike.

The services sector weakness in the EMU is quite important because it's a job producing sector. It’s no coincidence that consumer confidence and services in the EMU have the lowest standings. The outlook for the monetary union is going to depend a lot on how the forces of inflation develop as well as how the war in Ukraine develops. In the meantime, U.S. budget politics could rile markets, and we are told that China is trying to dazzle the Trump Administration with a trade deal if it backs off support of Taiwan independence. Both of these are potentially global market moving events that are in flux.