The extreme-adjusted average of the ISM and PMI manufacturing surveys has ticked up a little in February. As usual, the line to watch is the thick green one, because that minimises the random month-to-month fluctuation.
Is this the beginning of an upturn? Obviously, it could be. But the PMI bumps we've seen in most countries in January and February have been due to the easing of supply-chain difficulties caused by the war and by covid lockdowns in China (now ended). If manufacturers can once again source materials needed for production, they can increase production and sales. On the other hand, the case against the beginning of a new upswing is that the effect of rising rates has yet to impact on the economy, if historic lags (±18 months) are repeated.
Yet investors and analysts must always be aware that they might be wrong, that circumstances have changed in a way which alters historic relationships. So, I might be wrong, and this is the beginning of a new upturn, and the recession I have been forecasting for many months is over. For the good of the world, I hope this is the case. For my professional reputation, I hope it isn't!
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