We now have the services PMIs for the Big 8, so I've updated the chart. As usual, each country's services and manufacturing PMIs were extreme-adjusted before they were combined (weighted by their proportion of world GDP) to give the Big 8 averages. The green line shows the average of services and manufacturing, and will be the closest to actual GDP. Note how, last year, services jumped as post-Covid "revenge spending" took off, while manufacturing didn't, but this year, both are picking up. The Big 8 are: the USA, the Euro Area/Zone (countries with the Euro currency), China, Japan, the UK, Russia, India and Brazil, which together make up roughly 70% of world GDP.
World growth continues to pick up, though I suspect its "slope", that is, the rate at which it will accelerate, will be moderate, as the effects of the US fiscal stimulus fade.
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The chart below shows the Big 8 manufacturing PMI, vs the year-on-year change in extreme-adjusted industrial production (my calculation). Latest data for IP are estimates; we have IP to March and the PMIs to May. It's comforting that the result of many different surveys produces roughly consistent results---it means that there are no special factors at play. To put it another way: the uptick in the world economy is real. It's happening.
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| Double-click to see clearer image |
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