• Global PMI continued to improve in August breaking through the important 50 level with a reading of 51.7 from July’s 49.4. Thus signalling an expansion in the global manufacturing sector. What is even more encouraging is that the order-inventories balance continues to improve, thereby indicating a further improvement in the PMI indices going forward.
• The leading new orders index rose from 51.8 to 55.7 – the highest level since April 2006, whereas the inventories index was unchanged at 40.2.
• In the US, ISM broke the 50 level in August with a reading of 52.9 and the new orders index rose by 9.6 index points to 64.9. This points to around 4% GDP growth. Going forward we expect to see further improvements in ISM; our models suggest that the index will rise to 60 during the coming six months.
• With a reading of 48.2, the Euroland PMI is still below 50, but a further increase in the index last month and a continued improvement in the orders-inventories balance suggests that the overall index will soon break 50. In Scandi the PMI indices fell this month; the largest decline was found in Norway’s PMI, falling to 42.1 from 50.1 in July.
• Asia continues to look strong, in particular the new export orders have been very strong recently. In the CEE countries the PMI indices continue to be somewhat subdued, only showing marginal improvements in August.
• Outlook: We expect the global PMI indices to continue to improve in the coming months, thereby followed by more hard data such as industrial production and GDP. However, we expect that the speed of improvement in OECD’s leading indicators and order-inventory balances will start to moderate soon, but stay at high levels.
