World PMI update for August – Weakness in Europe

With the flash update for selected Markit PMIs for August, here is our monthly heatmap of worldwide manufacturing PMIs.

pmi.heatmap-2014-08-21

A few observations:

  • The Markit PMI for the US jumped to its highest level since 2011. While this is an encouraging sign, the link between the Markit measure and the more familiar ISM measure is not as strong as you would imagine, and we see this as confirming the strength we saw in July’s ISM release.
  • We were beginning to get concerned about Europe last month and that concern continues this month. France’s PMI is at a 15 month low and all of the big four Eurozone countries show month on month declines, though only France is below the 50 line showing that most companies are experiencing declining business conditions.
  • China continues to oscillate around the expansion / contraction line but the strength in the rest of Asia makes us hopeful. In particular, on this measure at least Japan seems to be emerging from its post VAT increase slowdown.