Saturday, July 4, 2009

The Resistible Rise of PMIs

The PMIs released on July 1st raised recovery hopes. While all the indices except Turkey are still in negative territory, the rise is prominent in all major developing economies, as the graphs from a recent Danske report, which I shamelessly stole (at least, I am doing free advertising for them, while at the same time providing a sneak peek to my laptop screen):

In Turkey, as in other countries, the rises were across the board, but output, new orders, export orders and employment were particularly strong. Moreover, inventory indicators suggest that some restocking may already be underway.

I am not sure what to make of the restocking argument. In an accounting sense, it is definitely positive development in the short run, but it has to be accompanied by consumption to sustain the recovery.

In that sense, maybe I should have named this post the resistible rise of making too much out of the irresistible rise of PMIs....

BTW, for more on this, there is a well-written FT article.

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