More evidence for fizzling uptick

I've talked before about how my fibre index is a good indicator of world economy activity.  Yeah, it surprised me too.

We've just had the preliminary PMI data for 4 of the big 8 economies/regions:  the US, the UK, Japan and the Euro zone, and the updated average is shown in the chart below.  It's interesting that even the mini cycles are similar.  For example, the world economy was starting to pick up in late 2019, which was aborted when the Covid Crash hit.  And fibre prices faithfully pick up that abortive little uptick.

Right now, like the manufacturing PMI (and "flash" services, too, which look to have peaked), fibre prices are falling.

Fibre prices correlated with world econ

 I've been doing some research (yes, I know, I have a life to live, but I thought it interesting---and it was.)

One would expect (I expected) that the prices of wool and cotton are driven primarily by agricultural conditions:  floods, droughts, snowstorms, et cetera.  It turns out that they are in fact strongly correlated with the world economy, in other words, with demand.   As such, they turn out to be a useful indicator of the movements in the world economy.   I haven't updated world IP for a couple of months, but the slide in fibre prices suggests it's weakening.  I'll be updating my world industrial production indices soon, I promise.

In particular, the fall in the wool price (uniquely, among commodities, wool is priced in A$, because of the importance of Australia to wool production), points to a faltering China recovery. 

Click on graph to see clearer image.  

Here's what the fibre index looks like over a shorter term.