Saturday, 2 July 2005

Global manufacturing, US consumer confidence up in June

Yesterday was good news day, especially for manufacturing.

In the US, the Institute for Supply Management said its index of national factory activity climbed to 53.8 in June from 51.4 in May. Most of the sub-indices improved, with the new orders index surging to 57.2 in June from 51.7 in May. The prices index slumped to 50.5 from 58.0.

In other news out of the US, consumer confidence was reported to be up too. The University of Michigan's measure of confidence rose to 96.0 in June from 86.9 in May. The preliminary June reading was 94.8.

Construction spending, though, was down 0.9 percent in May.

The Economic Cycle Research Institute reported that its weekly leading index edged up to 133.7 in the week ended June 24 from a downwardly revised 133.3 in the prior week. Anirvan Banerji, director of research at ECRI, was quoted by Reuters as saying that "economic growth will remain firm in the second half of the year".

The good manufacturing data in the US found parallels elsewhere around the world. The global purchasing managers' index (PMI) rose to 52.4 in June from 51.1 in May. The new orders index rose to 54.4 from 51.6 in May, its highest level so far in 2005.

Apart from Japan, which I reported on yesterday, Europe and Australia also saw improvements in their PMIs. The euro zone PMI rose to 49.9 in June from 48.7 in May. The Chartered Institute of Purchasing and Supply's PMI for the UK rose to 49.6 in June from a downwardly revised 47.0 in May. Similarly, Australia's PMI rose 4.7 points to 55.2 in June, helped by a hefty 12.1 point jump in new orders.

These are just one month's data, but together with other forward-looking indicators released recently, they do provide hope that the global economy, particularly manufacturing, may be stabilising.

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