The Institute for Supply Management ("ISM") Manufacturing Business Survey and Purchasing Managers Index ("PMI") are two closely-watched gauges.
Both indices are providing information about current business (mostly ISM) and manufacturing (mostly PMI) conditions, e.g. employment, production, inventories, new orders, supplier deliveries, and manufacturing firms to company decision makers, analysts, and purchasing managers.
The latest readings among the largest and/or most-closely monitored economies are drawing quite a mixed picture.
While the global manufacturing PMI remains at expansion mode (above 50), it's hard to ignore the synchronized global slowdown.
Chances of overheating of the US economy have come down somewhat.
Meanwhile, US productivity growth also remains stubbornly low.
After zero growth in Q3, Italy's (EWI) Manufacturing PMI fell to 49.2. Recall that a reading below the 50-threshold is pointing at an economy which is contracting.
This reading was not only below expectations but also the first time since June 2016 it's below the 50-mark.
This also signals that little or no growth is waiting for the boot country down the road.
The 49.2 reading on October is a sharp decline for the 53.3 reading in September - the largest drop in two years and the weakest/lowest reading since 2014.
As a matter of fact, based on the country's composite PMI (which is now in contraction territory too), Italy might be on the verge of another recession.
The leading indicator fell to 49.3 in October, the lowest reading since 2013. If and when the country enters a recession - that would be the third time in less than a decade.
Germany (EWG), Europe's (VGK, EZU, HEDJ, FEZ) largest economy, October factory orders came in at +0.3%, better than the -0.5% expected. However, the -2.2% Y/Y growth is still deep in negative territory.
The unexpected rise was mainly a result of domestic demand gaining momentum, climbing 2.8%, as well as investment and consumer goods moving up.
In-spite of it coming from much lower levels (in absolute terms), the EM Manufacturing PMI ticked up in October, seeing the gap against Developed Markets ("DM") (VEA, EFA, IEFA, VEU, SCHF) Manufacturing PMI at its narrowest level in over a year.
According to the latest IMF forecasts:
- World GDP is expected to grow at the same pace three years in a row.
- EM vs. DM growth will finally increase again.
- India (PIN, INDA) will grow more than China.
- China and Italy are expected to see lackluster growth.
If you wish to see how world GDP (by country) is heading to, perhaps the following animated videos will help:
Spoiler alert: US is expected to drop two places between 2018 to 2100. Actually, based on this projection, the US is going to lose its place as one of the two largest economies as early as in 2059.
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