Has the recent slowdown in US manufacturing run its course? That’s the implication in today’s flash estimate of Markit’s purchasing managers’ index (PMI), which increased by to 54.0 in October from 53.1 in the previous month—a five-month high that puts more distance between current activity and the neutral 50.0 mark. It’s still too early to break out the champagne or assume that the US economy is set to roar in the months ahead. But today’s release suggests that the manufacturing sector in the world’s biggest economy will continue to post moderate growth after a bout of deceleration.
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After a rough two months that witnessed a sharp decline in equity prices in the US, the stock market has recovered most of the losses since China announced a surprise currency devaluation on Aug. 11—an event that triggered a selling wave of risky assets around the world. It’s debatable if the worst is over. But from the vantage of the US equities, the outlook is considerably less threatening compared with the dark days from late-August through September’s close. The question is whether Mr. Market’s spiritual revival of late is a reliable indication of better days ahead vs. noise that’s distracting us from recognizing that a deteriorating trend is still underway?
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● Conference Board’s US Leading Economic Index dips in September | WSJ
● US jobless claims inch higher but remain near multi-decade low | MarketWatch
● US growth below average in September | Chicago Fed
● US existing home sales rise in Sep, near 8-year high | Bloomberg
● US consumer expectations weaken in Bloomberg survey | Bloomberg
● ECB signals more stimulus for Eurozone in December | The Economist
● Eurozone Composite PMI ticks up to 2-mo high in Oct | Markit