For my trip in Asia, Singapore is the forts step. The spontaneous impression is that the city is in constant reconstruction. There are building sites everywhere, the city moves and changes. Recent buildings (ten years) are destroyed and new ones are installed in a precise but evolving map of the city.
The city has an impressive energy and these changes reflect it. I think that there is, in general, a link between the dynamics of the city, how it is able to recreate itself continuously and the ability of its people to generate a new world.
The city by itself creates a momentum that appears to be stronger than in France. That may be why we can hear a lot of French language when we walk in the street
Singapore at night
The first chart below shows an upward trend for most PMI indices in Asia. A divergent dynamics can be seen in South Korea. It reflects a weak internal demand. Flows of orders decreased more rapidly than new export orders’ flows.
We notice Continue reading
PMI Surveys in Asia were heterogeneous in August as it can be seen on Chart 1
In China there was a little improvement. The two PMI indices were up but still very close to 50 that shows stability in economic activity. The official index, which represents large public companies, was at 51 in August versus 50.3 in July. The private sector index was just at 50.1 after 47.7 in July.
These numbers reduce the downside risk that was perceived last spring. We know that GDP growth will probably remain in the range 7-8% for the years to come due to the rebalancing of the growth process. Last spring after the central bank intervention there was a risk a stronger control on the credit and on the shadow banking sector. This would have created a specific risk on credit distribution and on growth. Some economists thought that growth number could fall below 4%.
June surveys in the manufacturing sector have brought a more heterogeneous dynamic than in the previous months. Asia is becoming weaker; Europe stronger and the USA try to find their way.
This heterogeneity is not bad news as this will create distinct expectation trends all over the world. This will contrast with the uniformity we’ve seen until recently.
The world index for the manufacturing sector was at the same level in June than in May at 50.6. There is an improvement in new orders which is compensated by deterioration in employment. But there is no strong tendency. Continue reading
The chart below shows synthetic indices from PMI/Markit and ISM surveys for the manufacturing sector in different large regions of the world.
What is important to catch is the kind of common dynamic with almost no divergence between the lines. All the lines except Japan were close to 55 in 2009/2010 during the recovery. They are all now close to 50 which is the level where activity does not change from one month to the other. There is no recent break on the upside or on the downside. (When I mention simple in the title is just that we can imagine a common dynamic and no divergence) Continue reading
In May, PMI indices for the manufacturing sector lose their momentum. (Chart 1). All the indices are close to the 50 threshold
(The index shows an improvement in activity when it is above 50 or a deterioration when it is below 50).
Japan (51.5) and the Chinese official index (50.8) are stronger in May, gaining momentum. Taiwan (47.1) South Korea (51.1 after 52.6 in April) China (PMI/Markit/HSBC at 49.2) and India (50.1) follow a downward trend. Activity is shrinking in China and rapidly shrinking in Taiwan. In South Korea the index is milder than in previous months. Index in India shows stability in May compared to April. Continue reading
March surveys in Asia show that economic momentum is strengthening.
Synthetic indices are all above 50 in March which means that economic activity is growing quicker. Nevertheless even if they are above 50, their level are still low. It is not a break on the upside. What is currently important is the homogeneity between all these news from Asia. In other words, they are all going in the same way which means positive contagion between countries and at the end a stronger outlook for the world economy as Asia is the world economy engine. India is less involved in this dynamic.