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PMI Recovers in China and Much of Europe

Douglas A. McIntyre

It would make sense that China's economy might make some modest recovery because it has been such a powerful GDP engine for so long. Not so Europe, where the recession has lingered for a record period and unemployment remains near or above historic highs. No matter the effects of the past, PMI recovered across most of each region last month.

Markit reported, in China:

After adjusting for seasonal factors, the HSBC Purchasing Managers’ Index (PMI) -- a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy -- posted at 50.1 in August, signalling that operating conditions were relatively unchanged from the previous month. This was up from an 11-month low of 47.7 in
July, and ended a three-month period of deterioration.

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In Europe:

Final Eurozone Manufacturing PMI at 26-month high of 51.4 in August (July:50.3).

Growth improves in Germany, the Netherlands, Italy, Austria and Ireland.


Manufacturers in Germany indicated a further improvement in overall business conditions during August, largely reflecting stronger new order inflows and faster output growth than those registered in July. At 51.8 in August, up from 50.7, the seasonally adjusted Markit/BME Germany Manufacturing Purchasing Managers’ Index (PMI) posted above the 50.0 no-change value for the second month running and signalled the strongest overall performance since July 2011. An upturn in operating conditions was recorded in all three market groups, with consumer goods producers posting the most marked improvement in August, followed closely by investment goods producers.

And, in France, the economy continued near recession measurements:

Overall business conditions in the French manufacturing sector deteriorated slightly in August. The headline Purchasing Managers’ Index (PMI) -- a seasonally adjusted index designed to measure the performance of the manufacturing economy -- posted 49.7. Unchanged from July’s reading, the PMI remained below the neutral 50.0 mark for the eighteenth consecutive month.

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Even Spain showed it was exiting a brutal downturn:

The Spanish manufacturing sector saw a return to output growth in August, helped by a sharp increase in new export orders. That said, data suggested that firms often opted to use existing stocks to help meet demand. Concurrently, employment was reduced at a faster pace, while further falls in the prices of some raw materials led input costs to decrease fractionally during the month.

The seasonally adjusted Markit Purchasing Managers’ Index (PMI) -- a composite indicator designed to measure the performance of the manufacturing economy -- posted 51.1 in August, up from 49.8 in the previous month. This represented the first monthly improvement in operating conditions since April 2011.

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