Business Cycle Monitor: Outlook Still Positive ‏

The global economy continued improving for another month, with both global leading indicators and new global PMI manufacturing orders rising. The lift came from the US and Europe, where PMIs increased considerably.

Europe put an end to the standstill of the last couple of months with a significant rise in manufacturing PMI and new orders. China continues its positive path, as the increase in PMIs goes on.

Overall, we believe that leading indicators will continue the upturn over the coming three to six months, as global uncertainty decreases and the recovery takes its hold in 2013.

Details
Global PMI new orders increased yet again, as the index went from 49.7 to 51.8. This was the largest increase in the index since 2009.

Manufacturing ISM in the US climbed substantially this month, with the index rising from 50.7 to 53.1. Together with decent job growth over the last few months, we believe this indicates that the US recovery and political certainty have taken hold .

In the Euro area, manufacturing new orders PMI jumped after being more or less constant for most of last year, as the index rose by 3.4, ending up at 43.5. The headline increased by 1.8 to 47.9, which is the largest increase in 12 months. In Germany, ifo expectations have increased for a few months and this month was no exception. In Sweden, the PMI continues to be relatively low but it has begun to increase. Danish manufacturing confidence and the Norwegian PMI increased slightly but the overall impression from Scandinavia is still that sentiment is relatively weak.

In China, PMIs were positive and the details remain strong, still suggesting accelerating growth. Japan shows signs of a rebound beginning, as production plans are positive and strong. In CEE, the general picture was positive, as PMIs and new orders rose, and in Russia PMI new orders went up after last month’s decrease. This was also the case for Brazil.

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