Thursday, July 5, 2012

Glimmers of Hope from Europe?


The global manufacturing PMI was released on Monday, and the results were worrisome:


The JPMorgan Global Manufacturing PMI™ – a
composite index produced by JPMorgan and Markit in
association with ISM and IFPSM – fell to three-year low of
48.9 in June, a reading below the neutral 50.0 mark for the
first time since November 2011.

Manufacturing production declined for only the second time
in the past three years. Although the rate of contraction
was only moderate, it was nonetheless the fastest since
May 2009. Growth slowed sharply in the US to its weakest
in the current 37-month sequence of expansion. Rates of
decline gathered pace in China, Brazil and Vietnam, while
Japan, South Korea and Taiwan all fell back into contraction.

http://www.ism.ws/files/ISMReport/JPMorgan/JPMorganMfg070212.pdf

However, Ned Davis Research pointed out that while the global index was dragged lower by a sharp decline in U.S. ISM, many countries seem to be showing signs of steadying, albeit at lower levels:

While the eurozone continued to weigh on the global PMI...the sharp drop in the U.S. ISM index contributed most to the monthly decline.  China's PMI also edged down, but a June decline is actually pretty common this time of year.  PMI's posting positive monthly changes actually increased in June, rising to 37%.  Australia, India and several developed and emerging European countries, which had been battered in prior months due to the crisis, posted monthly gains.

http://www.ndr.com/invest/home/docframe.action;jsessionid=E099105FD4E4B2A46C168B4F57CE5135.wt1?objectid=GC201207031.PDF&title=Global+Manufacturing+Falls

Eurozone equities are up 6.7% since the last euro summit, and are back to where they were a month ago - could the markets be signaling better times ahead?