Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Corona Virus Wuhan Global Pandemic 2020 Deaths Forecast and Market Consequences - 28th Jan 20
Palladium Surges above $2,400. Is It Sustainable? - 27th Jan 20
THIS ONE THING Will Tell Us When the Bubble Economy Is Bursting… - 27th Jan 20
Stock Market, Gold Black Swan Event Begins - 27th Jan 20
This Will Signal A Massive Gold Stocks Rally - 27th Jan 20
US Presidential Cycle Stock Market Trend Forecast 2020 - 27th Jan 20
Stock Market Correction Review - 26th Jan 20
The Wuhan Wipeout – Could It Happen? - 26th Jan 20
JOHNSON & JOHNSON (JNJ) Big Pharama AI Mega-trend Investing 2020 - 25th Jan 20
Experts See Opportunity in Ratios of Gold to Silver and Platinum - 25th Jan 20
Gold/Silver Ratio, SPX, Yield Curve and a Story to Tell - 25th Jan 20
Germany Starts War on Gold  - 25th Jan 20
Gold Mining Stocks Valuations - 25th Jan 20
Three Upside and One Downside Risk for Gold - 25th Jan 20
A Lesson About Gold – How Bullish Can It Be? - 24th Jan 20
Stock Market January 2018 Repeats in 2020 – Yikes! - 24th Jan 20
Gold Report from the Two Besieged Cities - 24th Jan 20
Stock Market Elliott Waves Trend Forecast 2020 - Video - 24th Jan 20
AMD Multi-cores vs INTEL Turbo Cores - Best Gaming CPUs 2020 - 3900x, 3950x, 9900K, or 9900KS - 24th Jan 20
Choosing the Best Garage Floor Containment Mats - 23rd Jan 20
Understanding the Benefits of Cannabis Tea - 23rd Jan 20
The Next Catalyst for Gold - 23rd Jan 20
5 Cyber-security considerations for 2020 - 23rd Jan 20
Car insurance: what the latest modifications could mean for your premiums - 23rd Jan 20
Junior Gold Mining Stocks Setting Up For Another Rally - 22nd Jan 20
Debt the Only 'Bubble' That Counts, Buy Gold and Silver! - 22nd Jan 20
AMAZON (AMZN) - Primary AI Tech Stock Investing 2020 and Beyond - Video - 21st Jan 20
What Do Fresh U.S. Economic Reports Imply for Gold? - 21st Jan 20
Corporate Earnings Setup Rally To Stock Market Peak - 21st Jan 20
Gold Price Trend Forecast 2020 - Part1 - 21st Jan 20
How to Write a Good Finance College Essay  - 21st Jan 20
Risks to Global Economy is Balanced: Stock Market upside limited short term - 20th Jan 20
How Digital Technology is Changing the Sports Betting Industry - 20th Jan 20
Is CEOs Reputation Management Essential? All You Must Know - 20th Jan 20
APPLE (AAPL) AI Tech Stocks Investing 2020 - 20th Jan 20
FOMO or FOPA or Au? - 20th Jan 20
Stock Market SP500 Kitchin Cycle Review - 20th Jan 20
Why Intel i7-4790k Devils Canyon CPU is STILL GOOD in 2020! - 20th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Factories Across the World Shift Gears

Economics / Economic Recovery Jul 03, 2012 - 05:20 AM GMT

By: Asha_Bangalore


Best Financial Markets Analysis ArticleThe US Institute of Supply Management (ISM) manufacturing survey results for June were disappointing; with the Purchasing Managers’ Index (PMI) at 49.7 in June, down from 53.5 in the prior month. This is the first monthly reading below 50.0 since July 2009 (see Chart 1). Index readings above 50 denote an expansion, while those below 50.0 point to a contraction in activity.

The index tracking new orders plunged 12.3 points to 47.8 in June from 60.1 in May. The June mark for new orders is the lowest since April 2009 and the size of the decline in June is one of few in the history of the index (see Chart 2). Indexes tracking production and employment slipped in June but they are holding about the critical 50.0 mark.

The index measuring exports (47.5 vs. 53.5 in May) fell below 50.0 and augurs poorly for exports in the second quarter. The year-to-year change in exports of goods has a strong positive relationship with the Ism index of exports (see Chart 3). Survey respondents noted that adverse economic developments in China and Europe are reflected in the weakness of the export orders index.

The Markit PMI, a new survey of factories in the United States, also shows a slowing of factory activity but the level of the index remains above 50 (52.47 vs. 54.0 in May) and the new orders gauge (53.7 vs. 54.06 in May) of this survey also slipped but by a smaller magnitude compared with the ISM survey.

Overseas, the official PMI of China was virtually steady at 50.2 in June vs. 50.4 in May. The official new orders index has held below 50.0 for two straight months (see Chart 4). The message from an alternate factory survey suggests a weaker factory sector. The HSBC Purchasing Managers' Index (PMI) fell to 48.2 after seasonal adjustments, the lowest since November 2011. As per the HSBC survey, the June reading is the seventh straight monthly mark below 50.0. The PMI’s of Japan and South Korea are moved to the contraction territory (see Chart 5), while that of India maintains an expansionary trend.


The news from Europe remains gloomy, with factories showing a declining momentum in July. The PMI’s of Germany (45.0), France (45.2), UK (48.6), Spain (41.1), Italy (44.6) and Greece (40.1) were reported to below the critical mark of 50; Ireland is the only exception (see Chart 6). The main conclusion of the factory sector reports is that growth is weak across major economies of the world – US, Europe, and Asia.


Q2 Private Sector Construction Spending Looks Promising

Overall construction spending rose 0.9% in May after a 0.6% increase in the prior month. The entire gain was due to a 1.6% jump in private sector construction outlays compared with a 0.4% drop in public sector construction spending. The 3.0% increase in residential construction spending during May is impressive, after a 1.7% increase in April. The April-May numbers point to strong growth in residential investment expenditures in the second quarter possibly stronger than the 20% annualized gain in the first quarter, based on data presented in the table below. Also, the April-May data of non-residential construction spending points to a positive contribution to second quarter GDP.

Asha Bangalore — Senior Vice President and Economist

Asha Bangalore is Vice President and Economist at The Northern Trust Company, Chicago. Prior to joining the bank in 1994, she was Consultant to savings and loan institutions and commercial banks at Financial & Economic Strategies Corporation, Chicago.

Copyright © 2012 Asha Bangalore

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules