Strong Start to the Year

Main content

The preliminary PMI reports show that the world continues to expand. With all but Japan clocking in from among major countries, we see that the December reports for manufacturing were up in 9 of 12 big economies. Germany and the Eurozone are above 60 and actually ticked higher from November. The JP Morgan estimate of the World Aggregate ticked up to 54.5 from 54. The U.S. printed an astounding 59.7, up from 58.2 in November. Most important was New Orders, an absolutely lovely 69.4 – above the 12-month moving average of 65.8. Fed Nowcasts look like Q4 will print another 3%: the New York Fed marks Q4 at 3.9% and Q1 at 3.2%, the Atlanta Fed GDPNow is at 2.8%, and the St. Louis Fed Economic News Index looks like 3%. As for concerns over the flattening of the yield curve this year, the New York Fed has a recession probability index based solely on the shape of the yield curve, and out 12 months that measure is at 11%. The Bloomberg Recession probability is just 3%, probably a better look given the unusual situation of U.S. interest rates. Here’s to a prosperous 2018! Please take a look at page 9 of the Global Perspectives™ book for more information on Global Manufacturing and Services.- Guest Blogger: Tim Kearney, PhD

Footer content