Global PMI’s point down

Overnight, global PMIs painted a gloomy picture of advancing economic weakness. First up, the J.P.Morgan Global PMI dropped into recession for the first time since June 2009, falling from 50.2 in August to 49.9 in September:

The new orders index showed greater weakness with a 0.9 point fall:

Ironically, the US was the stand out perfomer, with it’s ISM climbing a little to 51.6% in September, up from 50.6% in August. The new orders index was unchanged at 49.6% (h/t Calculated Risk):

But the slide of the Eurozone is continuing, down 0.5 t0 48.5 points in September:

Every Eurozone country has been drawn into the vortex, with the exception of Germany (for now):

And, the new orders index is signaling much worse ahead:

In Australia’s region, Taiwan also reported its fourth month of shrinking manufacturing, down to 44.5 from 45.3 in August. Brazil also shrank further on similar figures. Canada bucked the trend with a  slight rise to 55.

So, Europe is leading Western industrial production into recession. North America is holding up OK on recovering vehicle production but the rising $US and slumping external demand is going to catch up to it sooner rather than later. The BRICS are not decoupled.

Houses and Holes


  1. But Adam Carr says…

    This is a surprising outcome with little in the way of new news on Greece, especially as the ISM survey surprised on the upside and rose. In September the index put on one point, to be at 51.6 from 50.6, and against an expectation of 50.5. Employment, prices and exports all accelerated in the month. There’s still no sign of this recession everyone keeps talking about.

    Indeed, rather than deteriorate, which you would expect if we were sliding into a new recession, manufacturing so far has improved in the US, China and Japan over the last month. Only the European PMI points to a deterioration. Nevertheless, these PMIs do not have the track record of the ISM survey and it’s still unclear, given the hard data continues to rise, whether the PMIs are simply capturing poor sentiment and a decision by manufacturers to run down inventories (amidst all this uncertainty). Put another way, I doubt very seriously whether the ECB would base policy solely on the PMI survey.

    So again, all is good on planet Carr. Which planet are you on?

      • Look, the Euro PMIs are just reflecting “poor sentiment”. Its not like there’s actually anything fundamentally broken in Europe.

        • I know, it’s a tough one. Who to believe?

          The mad permabull.


          the PMI’s, stock markets, credit markets and commodity markets, which are all locked in steep downward trends?

          • That ECRI video you posted was the clincher for me. The ERCI didn’t buy into the double-dip talk that had every permabear (Rosenberg!) in a lather last year, but they’ve put their (very good) reputation on the line with that unambiguous recession call.

      • He is THE Major Tom that David Bowie referred to.

        Ground control to major Tom
        Ground control to major Tom
        Take your protein pills and put your helmet on
        (Ten) Ground control (Nine) to major Tom (Eight)
        (Seven, six) Commencing countdown (Five), engines on (Four)
        (Three, two) Check ignition (One) and may gods (Blastoff) love be with you

        This is ground control to major Tom, you’ve really made the grade
        And the papers want to know whose shirts you wear
        Now it’s time to leave the capsule if you dare
        This is major Tom to ground control, I’m stepping through the door
        And I’m floating in a most peculiar way
        And the stars look very different today

  2. Not wanting to defend Mad Adam but I do think too much is being placed on changes to survey data that are probably within error margins.

    e.g. “falling from 50.2 in August to 49.9“. Isn’t it conceivable that within the errors associated with these surveys that the value last month was really 49.9 and now it is 50.2?

    None of which is to deny that things aren’t bad (unlike Carr) but lets take our cue for gloom from hard data rather than surveys.

    • That may be a fair point on one month. But I said the trends are locked in. Also, as said, I’m looking at PMIs, credit markets and stock markets. They are all yelling the same thing.

      Point taken, though. Mad Adam gets me upset and it’s all a bit undignified.

  3. Most ordinary people are still doing their work as before GFC which is why the data holds up. The big problems are in the financials which went unregulated for too long – we know the story on MB. The data also seems to show that some stimulus had an effect but probably disproportional to what was spent as Bernanke tried to cure debt problems by loading up on bad debt.