While the manufacturing PMIs are notoriously volatile series month-to-month, they give us the most timely and relatively high frequency insights into the global and regional macroeconomic backdrop. The April round showed a couple of signs of “growth wobbles” hitting the global economy. Both Emerging Markets and Developed Economies have seen their composite manufacturing PMIs level-off after the great rebound last year. By the nature of a diffusion index (which is what a PMI is) there are natural limits on how persistently it can increase month-to-month, but even if the PMIs stop and maintain their current levels it’s still consistent with reasonable growth outcomes. With global trade going from strength to strength it’s quite likely that what we are seeing is a temporary pull-back or pause.
The composite PMI for EM vs DM has leveled off since the Fed resumed rate hikes in December last year, but so far it is quite a different experience from the previous December’s hike.
This curious chart shows the big rebound and subsequent recent loss of momentum is mirrored in the USA and China, and given they account for a dominant share of global GDP, this is indeed a chart to watch.
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