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September SMI suggests slowing sales

One of the first surveys for September, the SMI (Sales Managers Index - kind of like the more popular PMI or Purchasing Managers Index), was just released for a handful of economies. It's always interesting to examine alternative economic indicators to bring in a new perspective and in this case get an early lead on economic trends. In this article we look at the SMI and how it's tracking for the US and selected emerging and frontier market economies.


The SMI for the US continued to track the lows of the range of 2016, with "stability" the most optimistic prognosis, and stagnation the best description. World Economics (the guys who run these surveys) said: "Sales Managers are reporting that consumers and business clients are being cautious and adopting a ‘wait and see’ attitude for big ticket purchases. Along with consumer uncertainty in this election year, the Business Confidence Index has plunged further to 47.9, the lowest reading in the survey’s history. "

So this is another sign of the fragile, stagnant, and uncertain conditions that seem to characterize the US economy at this point. The upside is that if firms and consumers are holding off on decisions, it implies that they might pull the trigger on purchase/investment/hiring decisions down the track...

China and India

There's not really much to say about China's SMI, it was in line with previous and has been relatively stable but at a lower range. It aligns with a prognosis of stable but slowing for China's economy. India on the other hand has been on an improving trend and World Economics had a much more optimistic assessment of India's economy: "The Business Confidence Index level for September has maintained its very high level and panel feedback suggests that the summer monsoon season has done little to dampen expectations. The Sales Index has surged to a new all-time high reading, reflecting very high levels of growth across virtually all market segments, and indicating 7-8% GDP growth in the third quarter."

Africa and LatAm

While not the most followed regions, there's also SMIs on Latin America (country indexes on Brazil and Mexico) and Africa (country indexes on South Africa and Nigeria). Both have been performing miserably. While Africa has turned down recently (largest economy, Nigeria, in recession, and security issues/low oil hurting North Africa, and South Africa still hurting from strong dollar/weak commodities), Latin America seems to be stabilizing if not setting up for a rebound. World Economics had this to say of LatAm: "Firms are still laying off employees as a result of the recession but the rate of job shedding has started to ease from the low point reported in July. Overall, the latest survey data suggests that if sales and market growth continue on their current trajectory, the Latin American economy of will likely return to growth during Q4."


The SMI indicators provide further insight into the economies covered above. The key takeaways from the SMIs are that the US remains in a state of stagnation with uncertainty weighing hard and data looking more "mixed"; China has stabilized, but isn't really doing much either way; India is going strong and is set to be one of the strongest growing economies; Latin America looks close to leaving recession, at least stabilizing and getting less bad; and Africa continues to face challenging economic conditions. So there's not much in the way of unifying themes except for the previous description of fragile, gradual, and divergent.

The flash manufacturing *PMI* for Europe/Japan/US will be out later this week, and will provide a timely complement to the above dataset. China, while it lost its flash PMI, has the MNI business sentiment survey out, which will also provide some context on China's economy. Will look to get some analysis up on these as soon as they're released, so keep an eye out for that...

Bottom line: The SMI showed stagnant growth in the US, stable in China, accelerating in India, stabilizing in LatAm, and worsening in Africa; overall a mixed picture.

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