After falling month on month for a while, the GDP-weighted extreme-adjusted PMI for the big 8 (USA, Euro zone, China, Japan, UK, Brazil, India, Russia) ticked up a little in January.
Is this the low point? Well, obviously it could be. But I think the mild rebound is prolly as much to do with European gas prices falling sharply, because of very mild weather and increased gas supplies. A physical shortage of gas would cause an immediate economic crunch, whereas monetary tightening only takes effect with a lag. So the removal of a gas shortage, or the fears of a gas shortage, will cause a rapid rebound. In fact, the end of the gas crisis has emboldened the ECB to raise rates to fight inflation. It is expected to raise its discount rate by 0.5% at its next meeting later this week. And the impact of that will play out over the next year.
In my judgement, this is not the bottom of the business cycle. But there may be a slowdown in the rate of decline, or a levelling off over the next couple of months before the slide resumes.
We shall see.
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