{"id":4735,"date":"2024-08-02T14:54:35","date_gmt":"2024-08-02T14:54:35","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=4735"},"modified":"2025-03-27T15:50:46","modified_gmt":"2025-03-27T15:50:46","slug":"unfavourable-pmi-precedents","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=4735","title":{"rendered":"Unfavourable PMI precedents"},"content":{"rendered":"<p>Manufacturing PMI results for July support the <a href=\"https:\/\/moneymovesmarkets.com\/journal\/2024\/7\/4\/a-monetarist-perspective-on-current-equity-markets.html\">forecast<\/a> of a global &ldquo;double dip&rdquo; into early 2025.<\/p>\n<p>The global manufacturing PMI new orders index plunged by 1.9 points from June to 48.8, a seven-month low. The combination of a one-month fall of this magnitude or greater and a sub-50 reading occurred in only 14 months since 1998, highlighted by shading in chart 1.<\/p>\n<p><strong>Chart 1<\/strong><\/p>\n<p><span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" src=\"https:\/\/newstar.squarespace.com\/storage\/020824c1.png?__SQUARESPACE_CACHEVERSION=1722597718525\" alt=\"\" \/><\/span><\/span><\/p>\n<p>In chronological order, those months were:<\/p>\n<ul>\n<li>\n<p>October 1998 (Asian \/ Russian \/ LTCM crises)<\/p>\n<\/li>\n<li>\n<p>December 2000 \/ January 2001 (start of US \/ global recession)<\/p>\n<\/li>\n<li>\n<p>September \/ October 2001 (911 terrorist attack)<\/p>\n<\/li>\n<li>\n<p>March 2003 (Iraq invasion)<\/p>\n<\/li>\n<li>\n<p>September through December 2008 (GFC climax)<\/p>\n<\/li>\n<li>\n<p>November 2011 (Eurozone crisis \/ recession)<\/p>\n<\/li>\n<li>\n<p>February through April 2020 (covid recession)<\/p>\n<\/li>\n<\/ul>\n<p>So the current signal suggests significant economic weakness and risk-off markets, at least until policy-makers respond.<\/p>\n<p>The forecast that global economic momentum would weaken in H2 2024 was based on a fall in six-month real narrow money momentum into a low in September 2023 and an observation that the money-activity lag has recently extended to a year or more &ndash; chart 2.<\/p>\n<p><strong>Chart 2<\/strong><\/p>\n<p><span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" src=\"https:\/\/newstar.squarespace.com\/storage\/020824c2.png?__SQUARESPACE_CACHEVERSION=1722597739242\" alt=\"\" \/><\/span><\/span><\/p>\n<p>The September 2023 real money momentum low suggests that PMI new orders will reach a low by January 2025. With money trends still <a href=\"https:\/\/moneymovesmarkets.com\/journal\/2024\/7\/26\/global-money-growth-stall-extends-as-pmis-soften.html\">weak<\/a>, however, a recovery may be lacklustre.<\/p>\n<p>Could PMI new orders break below the low of 46.5 reached in December 2022? The low in six-month real narrow momentum in September 2023 was beneath the preceding low in July 2022 &ndash; chart 2. Current weakness is more likely to spill over into labour markets, creating negative feedback loops.<\/p>\n<p>&ldquo;Surprise&rdquo; economic deterioration is forecast to be accompanied by sharply weaker inflationary pressures, reflecting&nbsp;broad money&nbsp;stagnation in H2 2022 \/ H1 2023. The consumer goods PMI output price index fell back below its pre-pandemic average in July, following a plunge in the consumer services index the prior month &ndash; chart 3.<\/p>\n<p><strong>Chart 3<\/strong><\/p>\n<p><span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" src=\"https:\/\/newstar.squarespace.com\/storage\/020824c3.png?__SQUARESPACE_CACHEVERSION=1722597763125\" alt=\"\" \/><\/span><\/span><\/p>\n<p>&#8212;&#8211;<br \/>\nCOMMENT:<br \/>\nAUTHOR: David Cotton<br \/>\nEMAIL:<br \/>\nIP: 87.224.97.121<br \/>\nURL:<br \/>\nDATE: 08\/02\/2024 02:54:35 PM<\/p>\n<p>Concern should probably be Labour market weakness tipping the housing cycle over in 2025. Possibly leading to a prolonged period of economic weakness.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Manufacturing PMI results for July support the forecast of a global &ldquo;double dip&rdquo; into early 2025. The global manufacturing PMI new orders index plunged by 1.9 points from June to 48.8, a seven-month low. The combination of a one-month fall of this magnitude or greater and a sub-50 reading occurred in only 14 months since [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-4735","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/4735","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4735"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/4735\/revisions"}],"predecessor-version":[{"id":7044,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/4735\/revisions\/7044"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4735"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4735"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4735"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}