Things to note include:
- Inventories to new orders ratio is a great leading indicator for profits. Yuk!
- The great goods deflation bust has begun.
- But, it has not yet reached employment so central banks will keep tightening.
- A global DM recession has begun and a trade shock is now coming to EM as destocking takes hold of the supply chain.
Goldman with a handy wrap.
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- The DM composite flash PMI fell into contractionary territory in July (-3.4pt to 49.0) as services dropped by -3.8pt to 49.3 and manufacturing slipped by -1.1pt to 51.6.
- The manufacturing flash PMI decreased across all major DMs, especially in the Euro area (-2.5pt to 49.6) on lower demand and higher energy costs.
- The services flash PMI decreased sharply in the US (-5.7pt to 47.0) and declined in other DMs, especially in Japan (-2.9pt to 51.2) and Euro area(-2.4pt to 50.6).
- The DM flash forward-looking components decreased for manufacturing with order-to-inventories hitting its lowest level since May 2020 of 0.91,and for services (future activity down by -3.5pt to 57.7), consistent with early US business surveys.
- The DM manufacturing new orders flash PMI fell into contractionary territory, with the sharpest decline in the Euro area by -2.5pt to 42.6.
- The composite flash employment PMI slipped but remained above 50 in all major DMs.
- The manufacturing suppliers’ delivery times component shortened in Euro area (+4.4pt to 38.6) and the UK (+3.9pt to 38.4) and remained roughly unchanged in the US at 33.5.
- The net balance of firms expecting wage costs to increase has reached an all-time high in Japan and the Euro area, but it edged down in the US and the UK.
- The DM output prices decreased by -3.4pt for manufacturing to 66.3 and by -1.7pt for services to 60.1, while the DM input prices decreased by-2.9pt for manufacturing to 76.4 and by -2.0pt for services to 73.1