Global PMI Numbers Improve In August

While the Indian markets are plagued by bearish sentiments, the PMI numbers from China, Europe and USA have shown an improvement. That brings to bear the question of whether the economies in these countries are showing an improvement. One, however, has to wait until the June quarter, GDP numbers are out.

The Flash Manufacturing PMI numbers for China were released on Thursday, August 22. This was recorded at 50.1, reaching a four-month high. In July, this reading was recorded at 47.7, indicating a contraction in the manufacturing sector. The August reading has shown an expansion again, which certainly augurs well.

The PMI numbers for the Euro zone have also remained healthy, with the composite PMI at 51.7 indicating the fastest recovery in the economy in the last two years. The Flash PMI for the region for August 2013 stood at 51, while that for the manufacturing sector stood at 51.3. New orders are increasing in the region, while input prices are also showing a rising trend.

Meanwhile, the US Flash PMI, also published yesterday, indicated a five month high due to growth in the manufacturing sector. Growth overall has remained a little more sluggish than expected, but expansion has continued. The key takeaway from the US PMI numbers are that the employment rate is increasing, which could mean a higher probability of QE tapering earlier than expected. There are already talks that the Fed Reserve may kick off QE tapering as early as September 2013.

Chris Williamson, Chief Economist at Markit said, “The Euro area’s economic recovery gained momentum in August, with manufacturing and service sector companies reporting the strongest pace of expansion for just over two years”. On the Flash PMI numbers for the US Williamson said, “The US manufacturing sector saw only modest growth of production in August, suggesting that the economy is continuing to recover in the third quarter but that the pace of expansion remains disappointingly sluggish”.

Overall, the three major regions have given positive signals, indicating that these economies remained well on the recovery path in August 2013.