Eco Week

Broad-based strength in manufacturing whereas services offer a more diverse picture

02/12/2021
PDF

The World composite purchasing managers’ index has been in a narrow range since August last year. At 52.3, it is still comfortably above the 50 mark, although it has been trending down since the peak of 53.3 reached in October. However, the dynamics at the country level are very heterogeneous. The US index saw a big jump in January, reaching the highest level for the period under review. The index remains at a very strong level in India but has eased in China. With the exception of Germany (50.8), the numbers for the European countries are below the 50 mark, sometimes significantly, such as in Ireland, Spain and the UK.

In the manufacturing sector, the message is quite different. At the world level, it eased very slightly in January, remaining close to the high over the past 12 months. Importantly, 15 countries have a PMI above 54 whereas only 3 have an index lower than 46. The US PMI continues to strengthen, reaching second place, right behind Switzerland. The eurozone and its members are doing fine, with exception of Spain, which dropped below 50. Germany and the Netherlands are particularly strong and Italy saw a significant improvement. The same applies to Turkey. China on the other hand recorded again a decline. The index is now at 51.5 coming from 54.9 in November.

The picture is less favourable for new export orders. The index was again down at the global level and it improved significantly in the US. However, in China, it dropped well below the 50 mark. Vietnam also saw a decline, although less strong than in China. The biggest drop was recorded in Russia. In Europe, the data for Germany, Spain and Italy are particularly robust. The index for the UK had a huge decline, from 55.6 to 48.4.

The employment component of the manufacturing PMI shows that companies remain cautious in their assessment of hiring needs. At the global level, the index has been remarkably stable for the past three months, slightly above the 50 mark. The reading improved in the US and inched higher in the eurozone. In France it dropped below 50 to 49.1, whereas it improved in Germany, to 47.8. Spain recorded a considerable drop, to 46.9.

The services PMI had another small decline at the global level but at 51.6, it is still well above 50. This is underpinned by the strong scores for the US –where the index rebounded significantly-, Australia, China –which saw a large decline from 56.3 to 52.0- and India. The poor data for the eurozone reflect the impact of the restrictions to fight the pandemic.

COMPOSITE PMI
MANUFACTURING PMI
SERVICES PMI
MANUFACTURING PMI – NEW EXPORT ORDERS
MANUFACTURING PMI – EMPLOYMENT
THE ECONOMISTS WHO PARTICIPATED IN THIS ARTICLE

Other articles from the same publication

United States
US fiscal stimulus: doing not enough is the greater risk

US fiscal stimulus: doing not enough is the greater risk

The dire state of the labour market requires a major support effort for the economy. This view is shared by Fed Chairman Jerome Powell and Treasury Secretary Yellen [...]

Read the article
United States
Light at the end of the tunnel

Light at the end of the tunnel

Even as the Covid-19 pandemic spreads to more victims than ever in the United States, there have never been such high hopes for a recovery [...]

Read the article
Global
Covid-19: a heterogeneous vaccination pace

Covid-19: a heterogeneous vaccination pace

The rollout of the vaccination process is vital for the economies to go back to normal again [...]

Read the article