September flash PMIs

Here's a quick update on the September round of flash manufacturing PMIs from IHS Markit. The results were mostly positive with Europe up +0.9 to 52.6 (Germany +0.7 to 54.3, France +1.2 to 49.5), Japan up +0.8 to 50.3 and China (the MNI China Business Sentiment flash result) up +1.5 to 55.8, and only the US falling -0.6 to 51.4 as Fed & election uncertainty weighed. Despite the US drop, it's worth noting that all major regions were above 50 (in expansion zone).

flash PMIs

Standouts and outlook

A couple of standouts and themes are worth noting. First is the improvement in export orders; Japan has seen a notable turnaround in the export orders component of its PMI, similarly Taiwan export orders have surprised to the upside, German manufacturers also cited improved export new orders. So this is an interesting development that could mean an improved global trade outlook in Q4. T he exception was the US which is seeing the strong dollar weighing on orders, so it's possible that there is an element of switching to the improvement, but it's still notable and reasonably broad based.

export orders

An improving trade outlook along with all 4 regions being in expansionary territory, and with an environment of stimulus in China and still very easy monetary policy across most of the world, the outlook for manufacturing should be positive over the next couple of quarters. Thus the global slump in industrial production I pointed out the other day could be over sooner than you expect...

Bottom line: The September round of PMIs saw improvement in all regions except the US, so with all surveys still in expansion mode and positive signs on exports, the outlook is on-balance positive.

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