January 2011 Manufacturing PMIs: Global expansion shifting gears!

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The manufacturing PMIs for January indicate that globally growth in the factory sector is robust. My GDP-weighted PMI for the major economies jumped to 57.2 compared to 54.9 in December – the highest since April last year and the fifth consecutive month of gains. The U.S. was particularly strong, with the PMI rising to 60.8 in January from 58.5 in December – the highest since May 2004 when it reached 61.4. Other countries that reported materially stronger growth were Ireland, the U.K., Taiwan and South Africa. Only France and China reported materially weaker growth, while the manufacturing sector in Japan is at long last expanding again. The weakness in Australia’s factory sector is abating but Greece is sinking further.

In the Eurozone the manufacturing sectors in Germany continue to be robust, while Ireland and Italy continue to surprise on the upside. The manufacturing sector in the U.K. accelerated to a robust 62.0.

In Asia, Japan’s PMI improved slightly but the manufacturing sector remains in the grip of a recession. Among the Asian tigers growth at the factory levels in India accelerated again, but that of China has moderated somewhat due to seasonal factors alluded to in my blog yesterday. Growth in Emerging Europe continues be robust.

Manufacturing PMI


U.S.*****60.857.0Expansion accelerated, robust
Eurozone*57.357.1Expansion accelerated, robust
Germany*60.560.7Expansion accelerated, robust
France*54.957.2Softened a tad, robust expansion
Greece*42.843.1Contraction intensified
Italy*56.654.7Expansion accelerated
Spain*52.051.5Expansion accelerated
Ireland*55.852.2Expansion accelerated
U.K.*62.058.3Expansion accelerated, robust
Japan*51.448.3Expanding again
Australia*46.746.3Contraction moderated
Emerging Economies
Brazil*53.152.4Expansion accelerated
China**52.953.9Expansion slowed
Czech*60.558.4Expansion accelerated, robust
Poland*55.656.3Softened a tad, robust expansion
India*56.856.7Robust expansion
Russia*53.553.5Continued to expand
Taiwan*54.751.7Expansion accelerated
RSA***54.651.7Expansion accelerated
S Korea53.553.9Expansion decelerated somewhat
Global****57.254.9Expansion accelerated, robust

Sources: Markit*; Li & Fung**; Plexus Asset Management****; ISM*****.

It is apparent that the global manufacturing sector has found a firm footing and that the upward trend is likely to be maintained in coming months.

Sources: Markit; Li & Fung; Plexus Asset Management; ISM.

Growth in global industrial production on a year-ago basis is likely to gain momentum through the second quarter of this year.

Sources: Markit*; Li & Fung**; Plexus Asset Management****; ISM*****; I-Net Bridge.

Industrial metal prices will continue to be strongly supported by the acceleration of the global manufacturing sector.

Sources: Markit*; Li & Fung**; Plexus Asset Management****; ISM*****; I-Net Bridge.

The numbers again surprised me on the upside. I continue to fret about how things will pan out in China given the stricter monetary policies of the PBoC, the potential contagion of the debt crisis in the Eurozone and the other black swan that has suddenly appeared on the radar – the geo-political situation and especially Egypt. I do feel a bit more relaxed about the global economy, though. The non-manufacturing PMIs to be published on Wednesday and Thursday are likely to paint similar positive pictures.

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