The manufacturing purchasing managers’ indexes for June were releasedTuesday morning without any clear message other than that the global economy is expanding, albeit at a moderate pace. Within the individual reports, China is back to modest expansion while the U.K. is booming. Elsewhere, manufacturing is contracting in Turkey, South Korea, Norway and France. The latest Bank of Japan tankan survey of Japanese business came in weaker than expected as the negative impact of the consumption tax increase in April continues to be felt. Perhaps that should be unsurprising given the significant compression of real wages following the jump in inflation caused by the tax increase.
All eyes were on the Chinese PMIs which offered a moderately positive message: both the unofficial and official estimates point to manufacturing growth even if the official estimate was a shade below expectations. Elsewhere in Asia, the PMIs were mixed. Taiwan’s hit a four-month high, while South Korea’s dropped to a 10-month low. Overall, the numbers don’t point to muted strength in the global economy.
As with Asia, Europe’s PMIs were a broadly mixed bag. Eastern Europe showed some softening, Turkish, French and Norwegian manufacturing are contracting while some of the bombed out euro-zone economies are returning to health. The big outlier continues to be the U.K., which is expanding strongly. This has sent sterling rallying on expectations that the Bank of England will find itself having to increase rates sooner than later.
All eyes were on the Chinese PMIs which offered a moderately positive message: both the unofficial and official estimates point to manufacturing growth even if the official estimate was a shade below expectations. Elsewhere in Asia, the PMIs were mixed. Taiwan’s hit a four-month high, while South Korea’s dropped to a 10-month low. Overall, the numbers don’t point to muted strength in the global economy.
As with Asia, Europe’s PMIs were a broadly mixed bag. Eastern Europe showed some softening, Turkish, French and Norwegian manufacturing are contracting while some of the bombed out euro-zone economies are returning to health. The big outlier continues to be the U.K., which is expanding strongly. This has sent sterling rallying on expectations that the Bank of England will find itself having to increase rates sooner than later.
