The preliminary ("flash") average PMI for the Big 4 economies (the US, UK, Euro zone & Japan, together representing 48% of the world economy) fell again in August. This is the GDP-weighted average PMI for services and manufacturing, and each time series is extreme-adjusted before the average is calculated.
It's clear that the mini rebound or "blip" caused by "revenge spending" driving up services PMIs is over.
The longer term negative forces (50-year record declines in real money supply; the largest and fastest rise in central bank discount rates in 40 years; and the consequent credit crunch) are driving the world economy down. The service sector rebound held those forces back for a few months. That's stopped.
Share markets were pleased that the "flash" PMIs were weak, because that meant that Central Banks might be less likely to raise rates. But maybe it's time they started worrying about the risk of a recession, potentially a deep one, even with the big deficit spending from Biden's Inflation Reduction Act.
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