Global Business Sentiment Continues To Rise‏

The recovery continued in December, as global leading indicators and global PMI manufacturing new orders rose once again. China and the rest of Asia were the primary drivers of the improvement but US PMIs also increased slightly, pushing the global economy upwards.

In Europe, the PMIs remain stable at a low level but there are indications of a change beginning. National PMIs show signs of improvement for several countries and expectations are increasing.

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

Details
Global PMI new orders increased in December for the fifth month in a row. The index rose from 49.5 to 49.7.

In the US, manufacturing ISM bounced back from last month’s fall, as the index rose 1.2 to 50.7. The coming budget and debt ceiling negotiations may still affect sentiment negatively in coming months but uncertainty has been significantly reduced. However, the upturn in core capital goods orders and in manufacturing employment is an encouraging sign.

In the euro area, manufacturing PMIs are still more or less constant, as euro new orders have increased only 0.1 over the last six months and the headline increased only 1.1 index point in that period. However, there are signs of improvements, as some national PMIs have begun to increase.

In Germany, Ifo expectations have increased for a few months and new orders continue to rise. The Swedish PMI rose for the first time since July but is still at a very low level. Danish manufacturing confidence and the Norwegian PMI decreased slightly, indicating that Scandinavian sentiment is relatively weak.

In China, the PMIs improved for yet another month and so did PMIs in the rest of Asia. The exception is Japan, where sentiment continues to be weak. In CEE, PMIs were mixed and the Russian PMI decreased further. In Brazil, the PMI fell back after last month’s increase.

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