Over the past few months, central banks and other forecasters have performed the analytical equivalent of a 360. Late 2018, most commentators still expected 2019 to be another decent year, but after heightened financial market volatility and a string of data disappointments during the winter months, the narrative slowly shifted to one of slowdown. The only question was if it would be a really bad one, like in 2015 and 2016, or if the weak data even heralded a recession. When the most-feared recession indicator of all – an inversion of the yield curve – was confirmed a couple of month ago, we were all bracing for impact.
But then, something odd happened. Data started to improve again. And, currently, even more prominent forecasters, such as those at the FED, are rapidly back-tracking on their recession or near-recession calls. The fact that the inflation situation has not improved to the same extent, or even deteriorated, has been firmly shoved aside. The outlook had brightened.
That’s why the PMI-data out this week was somewhat of an oxymoron, since it deteriorated anew with quite a few components such as the order-inventory spread being anything but constructive.
Reading today’s short post, I hope you forgive me for having constructed a table using the Markit PMI database. If you don’t have access to the PMI data you could exchange it for the PMI series accessible in the core package, but with more limited time series (or contact your friendly Macrobond sales rep).
Avid readers of this blog know that I am no fan of survey data, but I must admit it would indeed be interesting to see the FED and other commentators try to perform a 180 on top of the recent 360, or maybe even a 720. Now that would be epic!