. . Laird Research - Economics June 11, 2015 Where we are now ........................ 1 Indicators for US Economy ................... 4 Global Financial Markets .................... 5 US Key Interest Rates ...................... 10 US Inflation ............................. 11 QE Taper Tracker ......................... 12 Exchange Rates .......................... 13 US Banking Indicators ...................... 14 US Employment Indicators ................... 15 US Business Activity Indicators ................ 17 US Consumption Indicators .................. 18 US Housing ............................. 19 Global Housing .......................... 21 Global Business Indicators ................... 23 Canadian Indicators ....................... 26 European Indicators ....................... 28 Chinese Indicators ........................ 30 Global Climate Change ..................... 31 Where we are now Welcome to the Laird Report. We present a selection economic data from around the world to help figure where we are today. It looks like inflation is coming back, at least in the US. More im- portantly, wage inflation is coming back - note the recent news articles about Walmart giving wage hikes etc. Quit rates and job opennings in the US are both up and the unemployment rate continues to drop. Participation rates – the portion of the population working or looking for work – are still at historic lows but holding steady, making year over year comparisons more appropriate. US wages grew 2.3% year over year. This is a big deal because one of the major items holding down inflation was excess labour supply - its hard to ask for a raise when you can be easily replaced with lower cost workers. That seems to have changed. The Employment Cost Index is showing an uptick indicating that those annecdotal data points are part of a larger trend. The other thing to consider is capacity utilization rates - basically, how close businesses are to running out of the ability to make more with the fixed assets they have. That rate has been slowly climbing over the past three years, but has dropped a bit (note as well that GDP for Q1 in the US was hit by record low temperatures which may explain part of that). There’s a cascade effect that is expected: higher wages and busi- nesses close to capacity translate into higher prices - but this is poten- tially masked by lower oil prices and global commodity prices (thanks for slowing down for us China!). You can look at the inflation charts to see that overall CPI crashed, but if you exclude food and oil, it’s hum- ming along nicely at about 2% - the consensus rate for the “appropriate” amount of inflation. Further, higher wages also translate into more disposible income, more spending and a hotter economy - both of those things seem to be happening now. So, we get a period of low prices, good domestic econ- omy (US PMI is at highs right now), growing wages and low interest rates.
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....Laird Research - Economics
June 11, 2015
Where we are now . . . . . . . . . . . . . . . . . . . . . . . . 1
Welcome to the Laird Report. We present a selection economic datafrom around the world to help figure where we are today.
It looks like inflation is coming back, at least in the US. More im-portantly, wage inflation is coming back - note the recent news articlesabout Walmart giving wage hikes etc. Quit rates and job openningsin the US are both up and the unemployment rate continues to drop.Participation rates – the portion of the population working or lookingfor work – are still at historic lows but holding steady, making year overyear comparisons more appropriate.
US wages grew 2.3% year over year. This is a big deal because oneof the major items holding down inflation was excess labour supply - itshard to ask for a raise when you can be easily replaced with lower costworkers. That seems to have changed. The Employment Cost Indexis showing an uptick indicating that those annecdotal data points arepart of a larger trend.
The other thing to consider is capacity utilization rates - basically,how close businesses are to running out of the ability to make more with
the fixed assets they have. That rate has been slowly climbing over thepast three years, but has dropped a bit (note as well that GDP for Q1in the US was hit by record low temperatures which may explain partof that).
There’s a cascade effect that is expected: higher wages and busi-nesses close to capacity translate into higher prices - but this is poten-tially masked by lower oil prices and global commodity prices (thanksfor slowing down for us China!). You can look at the inflation charts tosee that overall CPI crashed, but if you exclude food and oil, it’s hum-ming along nicely at about 2% - the consensus rate for the“appropriate”amount of inflation.
Further, higher wages also translate into more disposible income,more spending and a hotter economy - both of those things seem to behappening now. So, we get a period of low prices, good domestic econ-omy (US PMI is at highs right now), growing wages and low interestrates.
This is why we are seeing so many articles about the US Fed raisinginterest rates. The Fed’s job is to get ahead of inflation - there seem tobe more factors pointing to inflation coming than away from it.
The Non-Accelerating Inflation Rate Of Unemployment (NAIRU) isthe Fed’s best guess at the level of unemployment which doesn’t causeinflation to rise. Their target was recently dropped from 5.3% to 5.1%- they seem nervous about actually raising rates and uncertain aboutwhether the recovery is sturdy enough to withstand normal interestrates again. Thus they keep moving the target to give themselves morewiggle room. See also their inflation targets.
Once rates go up, then in theory the US dollar is more expensive,which makes exports more expensive (and imports cheaper) and thecost of capital will go up, which cools investment – negative factors forthe US. The rest of the world will be happy to see that happen - theUS consumer’s appetite for imported goodies has bailed out the globaleconomy before – it is still the world’s biggest economy.
We are also seeing lots of global currency games as variouseconomies try to devalue their currencies against one another to boosttheir economies. I’m looking at you Japan. And you too Germany -how such a strong export economy gets away with a depressed currencyis beyond me. I guess that’s why the rest of Europe is there [waves to
Greece and Spain].
Unfortunately, currency manipulation is a zero sum game so thatonly works if one of their trading partners is willing to see their currencyappreciate. The net result of this game would be a much stronger USdollar against the asian currencies. Again, the whole world is watchingthe US Fed because of all the ripple effects on currencies, imports etc.that happen as a result.
We are seeing slower growth from China, but perhaps the biggestunknown is the EU. Their Quantitative Easing (QE) program is in placewhich should increase the money supply and simultaneously lower bondyields (more money in the system and it costs less to borrow = a boostfor the Eurozone economy). However, a Greece debt default and Eu-rozone exit is a big question mark, more because of the uncertainty itcreates than any specific impact - Greece is a low single digit percentageof the Eurozone economy.
More importantly, we need to see that inflation is returning to theEurozone - they are currently deflating, in part from a sputtering econ-omy and in part from lower crude prices. I’m not sure the impact ofsaber rattling from Putin on Europe - it actually seems to be nothing,though war is a consistent destroyer of value. Employment is improvingthere and the business outlook is happier - but there is still an enormous
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amount of risk in the European economy.An observation: note that much of the discussion of government in-
tervention is actually done through central banks and monetary policy- literally trillions of dollars (and Euros) of assets are being bought andeventually sold through extraordinary measures like QE. And this is af-ter interest rates have been basically dropped to zero. There was a timewhen monetary policy was paired with fiscal policy - the governmentwould run a deficit and spend on some project or another and monetarypolicy would match it. It is historically odd that major economies havetossed aside all fiscal levers in favour of monetary strategies.
Note that the issue with Greece is all about the appropriate levelof austerity and restructuring that needs to happen - at the same timetheir central bank is engaging in a huge round of asset buying and rate
cutting to try to get their economies going again. Those monetary pol-icy battles were fought and lost in Ireland, Spain and Portugal already(not quite sure what the Italians are doing). Mark the moment: thepast 5 years have been a global science fair project to figure out theabsolute limits of monetary policy in a recession.
Formatting Notes The grey bars on the various charts are OECDrecession indicators for the respective countries. In many cases, the lastavailable value is listed, along with the median value (measured fromas much of the data series as is available).
Subscription Info For a FREE subscription to this monthly re-port, please visit sign up at our website: www.lairdresearch.com
Leading indicators are indicators that usually change before theeconomy as a whole changes. They are useful as short-term predictorsof the economy. Our list includes the Philly Fed’s Leading Index whichsummarizes multiple indicators; initial jobless claims and hours worked(both decrease quickly when demand for employee services drops and
vice versa); purchasing manager indicies; new order and housing per-mit indicies; delivery timings (longer timings imply more demand inthe system) and consumer sentiment (how consumers are feeling abouttheir own financial situation and the economy in general). Red dotsare points where a new trend has started.
North AmericaUSA S&P 500 Jun 11 2,108.9 0.6% s 0.2% s 3.4% s 8.5% s 1.00 0.70USA NASDAQ Composite Jun 11 5,082.5 0.5% s 1.8% s 4.8% s 17.3% s 0.93 0.65USA Wilshire 5000 Total Market Jun 11 22,310.0 0.7% s 0.4% s 3.3% s 8.2% s 1.00 0.71Canada S&P TSX Jun 11 14,830.9 -1.3% t -2.1% t 0.6% s -0.4% t 0.70 1.00Europe and RussiaFrance CAC 40 Jun 11 4,971.4 -0.3% t -1.1% t -0.5% t 9.1% s 0.48 0.48Germany DAX Jun 11 11,332.8 -0.1% t -2.9% t -4.0% t 13.9% s 0.46 0.39United Kingdom FTSE Jun 11 6,846.7 -0.2% t -2.6% t 1.9% s 0.1% s 0.57 0.53Russia Market Vectors Russia ETF Jun 11 18.4 4.1% s -9.3% t 11.4% s -27.9% t 0.39 0.49AsiaTaiwan TSEC weighted index Jun 11 9,302.5 -0.5% t -3.7% t -2.3% t 0.8% s 0.13 0.09China Shanghai Composite Index Jun 05 5,023.1 2.3% s 16.9% s 54.6% s 146.1% s 0.03 -0.03Japan NIKKEI 225 Jun 11 20,383.0 -0.5% t 3.9% s 8.9% s 35.3% s -0.10 -0.07Hong Kong Hang Seng Jun 11 26,907.8 -2.3% t -2.9% t 13.4% s 15.7% s 0.08 0.12Korea Kospi Jun 11 2,056.6 -0.8% t -1.9% t 3.8% s 2.1% s -0.20 -0.08South Asia and AustrailiaIndia Bombay Stock Exchange Jun 11 26,371.0 -1.7% t -4.1% t -8.0% t 3.5% s 0.21 0.23Indonesia Jakarta Jun 11 4,928.8 -3.3% t -4.7% t -9.1% t -0.9% t -0.01 0.04Malaysia FTSE Bursa Malaysia KLCI Jun 11 1,734.8 -0.4% t -3.9% t -2.4% t -7.6% t 0.03 0.14Australia All Ordinaries Jun 11 5,562.6 0.9% s -1.2% t -3.5% t 2.4% s 0.03 0.10New Zealand NZX 50 Index Gross Jun 11 5,858.4 -0.1% t 1.9% s -0.1% t 13.1% s -0.27 -0.18South AmericaBrasil IBOVESPA Jun 11 53,689.0 1.4% s -6.1% t 9.8% s -2.6% t 0.42 0.46Argentina MERVAL Buenos Aires Jun 11 11,363.9 1.0% s -6.1% t 12.2% s 40.7% s 0.35 0.42Mexico Bolsa index Jun 11 44,624.7 0.1% s -1.2% t 3.2% s 3.9% s 0.56 0.44MENA and AfricaEgypt Market Vectors Egypt ETF Jun 11 51.8 -2.9% t -3.1% t -11.6% t -22.7% t 0.18 0.26(Gulf States) Market Vectors Gulf States ETF Jun 11 27.5 -1.5% t -1.4% t 2.9% s -13.0% t 0.33 0.37South Africa iShares MSCI South Africa Index Jun 11 63.6 2.9% s -6.5% t -0.5% t -5.5% t 0.61 0.51(Africa) Market Vectors Africa ETF Jun 11 24.9 -0.8% t -5.6% t 0.6% s -22.7% t 0.41 0.39CommoditiesUSD Spot Oil West Texas Int. Jun 08 $58.1 -3.5% t -2.1% t 16.4% s -44.7% t 0.08 0.21USD Gold LME Spot Jun 11 $1,180.5 -0.2% t -0.4% t 1.9% s -6.5% t 0.06 0.14
Note: Correlations are based on daily arithmetic returns for the most recent 100 trading days.
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S&P 500 Composite Index
The S&P 500 Composite Index is widely regarded as the best singlegauge of the large cap U.S. equities market. A key figure is the valua-tion level of the S&P500 as measured by the Price/Earnings ratio. Wepresent two versions: (1) a 12-month trailing earnings version which
reflects current earnings but is skewed by short term variances and (2)a cyclically adjusted version which looks at the inflation adjusted earn-ings over a 10 year period (i.e. at least one business cycle). Forecastedearnings numbers are estimates provided by S&P.
12−month P/E ( median = 17.4, Jun = 21.3)10−year CAPE ( median = 19.5, Jun = 26.1)
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S&P 500 Composite Distributions
This is a view of the price performance of the S&P 500 index com-panies. The area of each box is proportional to the company’s marketcap, while the colour is determined by the percentage change in price
over the past month. In addition, companies are sorted according totheir industry group.
% Change in Price from May 1, 2015 to Jun 11, 2015
Average Median Median MedianSector Change P/Sales P/Book P/EHealth Care 3.8% s 3.7 4.1 27.4Financials 3.1% s 3.2 1.6 18.7Consumer Discretionary 0.5% s 1.8 4.3 21.1Information Technology 0.4% s 3.6 4.6 22.1Industrials -0.1% t 1.6 3.7 19.5
Average Median Median MedianSector Change P/Sales P/Book P/EMaterials -1.4% t 1.6 4.4 24.5Consumer Staples -1.6% t 2.3 6.0 25.2Telecommunications Services -2.6% t 1.4 2.1 31.4Utilities -4.3% t 1.5 1.6 17.1Energy -6.7% t 1.7 1.6 14.3
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US Equity Valuations
A key valuation metric is Tobin’s q: the ratio between the marketvalue of the entire US stock market versus US net assets at replacementcost (ie. what you pay versus what you get). Warren Buffet famouslyfollows stock market value as a percentage of GNP, which is highly(93%) correlated to Tobin’s q.
We can also take the reverse approach: assume the market hasvaluations correct, we can determine the required returns of future es-
timated earnings. These are quoted for both debt (using BAA ratedsecurities as a proxy) and equity premiums above the risk free rate (10year US Treasuries). These figures are alternate approaches to under-standing the current market sentiment - higher premiums indicate ademand for greater returns for the same price and show the level ofrisk-aversion in the market.
Tobin's q (Market Equity / Market Net Worth) and S&P500 Price/Sales
10%Implied Equity Premium (median = 4.2%, May = 4.7%)Debt (BAA) Premium (median = 2.0%, May = 2.8%)
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US Mutual Fund Flows
Fund flows describe the net investments in equity and bond mutualfunds in the US market, as described in ICI’s “Trends in Mutual FundInvesting” report. Note however that this is only part of the story as
it does not include ETF fund flows - part of the changes are investorsentering or leaving the market, and part is investors shifting to ETF’sfrom mutual funds.
Interest rates are often leading indicators of stress in the financialsystem. The yield curve show the time structure of interest rates ongovernment bonds - Usually the longer the time the loan is outstanding,the higher the rate charged. However if a recession is expected, thenthe fed cuts rates and this relationship is inverted - leading to negativespreads where short term rates are higher than long term rates.
Almost every recession in the past century has been preceeded by an
inversion - though not every inversion preceeds a recession (just mostof the time).
For corporate bonds, the key issue is the spread between bond rates(i.e. AAA vs BAA bonds) or between government loans (LIBOR vsFedfunds - the infamous “TED Spread”). Here a spike correlates to anaversion to risk, which is an indication that something bad is happen-ing.
US Treasury Yield Curves
For
war
d In
stan
tane
ous
Rat
es (
%)
14 15 16 17 18 19 20 21 22 23 24 25
0.0
0.5
1.0
1.5
2.0
2.5
3.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0Jun 10, 2015 (Today)May 11, 2015 (1 mo ago)Mar 10, 2015 (3 mo ago)10 Jun 2014 (1 yr ago)
Generally, the US Fed tries to anchor long run inflation expectationsto approximately 2%. Inflation can be measured with the ConsumerPrice Index (CPI) or the Personal Consumption Expenditures (PCE)index.
In both cases, it makes sense to exclude items that vary quickly likeFood and Energy to get a clearer picture of inflation (usually called
Core Inflation). The Fed seems to think PCI more accurately reflectsthe entire basket of goods and services that households purchase.
Finally, we can make a reasonable estimate of future inflation ex-pectations by comparing real return and normal bonds to construct animputed forward inflation expectation. The 5y5y chart shows expected5 year inflation rates at a point 5 years in the future. Neat trick that.
The US has been using the program of Quantitative Easing to pro-vide monetary stimulous to its economy. The Fed has engaged in aseries of programs (QE1, QE2 & QE3) designed to drive down longterm rates and improve liquidity though purchases of treasuries, mor-gage backed securites and other debt from banks.
The higher demand for long maturity securities would drive up theirprice, but as these securities have a fixed coupon, their yield would bedecreased (yield ≈ coupon / price) thus driving down long term rates.
In 2011-2012, “Operation Twist” attempted to reduce rates withoutincreasing liquidity. They went back to QE in 2013.
The Fed chairman suggested in June 2013 the economy was recover-ing enough that they could start slowing down purchases (“tapering”).The Fed backed off after a brief market panic. The Fed announced inDec 2013 that it was starting the taper, a decision partly driven byseeing key targets of inflation around 2% and unemployment being lessthan 6.5%. In Oct 2014, they announced the end of purchases.
QE Asset Purchases to Date (Treasury & Mortgage Backed Securities)
Trill
ions
0.00.51.01.52.02.5
0.00.51.01.52.02.5
QE1 QE2 Operation Twist QE3 TaperTreasuries
Mortgage Backed Securities
Total Monthly Asset Purchases (Treasury + Mortgage Backed Securities)
Bill
ions
−100−50
050
100150200
−100−50050100150200
Month to date Jun 10: $0.2
Inflation and Unemployment − Relative to Targets
Per
cent
02468
10
0246810
Target Unemployment 6.5%Target Inflation 2%
U.S. 10 Year and 3 Month Treasury Constant Maturity Yields
Per
cent
012345
012345
2008 2009 2010 2011 2012 2013 2014 2015
Short Term Rates:Once at zero, Fed moved to QE
Long Term Rates:Moving up in anticipation of Taper?
The banking and finance industry is a key indicator of the healthof the US economy. It provides crucial liquidity to the economy in theform of credit, and the breakdown of that system is one of the exac-erbating factors of the 2008 recession. Key figures to track are the
Net Interest Margins which determine profitability (ie. the differencebetween what a bank pays to depositors versus what the bank is paidby creditors), along with levels of non-performing loans (i.e. loan lossreserves and actual deliquency rates).
Unemployment rates are considered the “single best indicator ofcurrent labour conditions” by the Fed. The pace of payroll growth ishighly correlated with a number of economic indicators.Payroll changesare another way to track the change in unemployment rate.
Unemployment only captures the percentage of people who are inthe labour market who don’t currently have a job - another measure
is what percentage of the whole population wants a job (employed ornot) - this is the Participation Rate.
The Beveridge Curve measures labour market efficiency by lookingat the relationship between job openings and the unemployment rate.The curve slopes downward reflecting that higher rates of unemploy-ment occur coincidentally with lower levels of job vacancies.
There are a number of other ways to measure the health of employ-ment. The U6 Rate includes people who are part time that want afull-time job - they are employed but under-utilitized. Temporary helpdemand is another indicator of labour market tightness or slack.
The large chart shows changes in private industry employment lev-els over the past year, versus how well those job segments typically pay.Lots of hiring in low paying jobs at the expense of higher paying jobsis generally bad, though perhaps not unsurprising in a recovery.
Housing construction is only about 5-8% of the US economy, how-ever a house is typically the largest asset owned by a household. Sincepersonal consumption is about 70% of the US economy and house val-ues directly impact household wealth, housing is an important indicatorin the health of the overall economy. In particular, housing investment
was an important driver of the economy getting out of the last fewrecessions (though not this one so far). Here we track housing pricesand especially indicators which show the current state of the housingmarket.
15 20 25 30 35
150
200
250
300
Personal Income vs. Housing Prices (Inflation adjusted values)
New
Hom
e P
rice
(000
's)
Disposable Income Per Capita (000's)
Apr 2015
r2 : 89.4%Range: Jan 1959 − Apr 2015Blue dots > +5% change in next yearRed dots < −5% change in next year
The Federal Housing Finance Agency provides a quarterly surveyon house prices, based on sales prices and appraisal data. This gener-ates a housing index for 355 municipal areas in the US from 1979 topresent. We have provided an alternative view of this data looking atthe change in prices from the peak in the 2007 time frame.
The goal is to provide a sense of where the housing markets are
weak versus strong.The colours represent gain or losses since the startof the housing crisis (defined as the maximum price between 2007-2009for each city). The circled dots are the cities in the survey, while thebackground colours are interpolated from these points using a loesssmoother.
Change from 2007 Peak − Q1 2015
−50%
−40%
−30%
−20%
−10%
0%
10%
20%
30%
40%
50%
Today's Home Prices
Percentage Change from 2007−2009 Peak
Fre
quen
cy
−75% −50% −25% 0% 25% 50% 75%
Year over Year Change − Q1 2015
−10%
−8%
−6%
−4%
−2%
0%
2%
4%
6%
8%
10%
YoY Change in this quarter
YoY Percent Change
Fre
quen
cy
−15% −10% −5% 0% 5% 10% 15%
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Global Housing
The Bank for International Settlements has begun collecting globalhousing indicies, which are useful for showing what has been happeningwith global house prices. Note that these are not all the same data set -
each country measures housing prices in slightly different ways, so theyare only broadly comparable. Black lines are the data series, blue barson the right axis show the year over year percent change.
Brazil − Metro All Dwellings
Q1
2011
= 1
00
6080
100
140 Jan 2015: 148.01
Chile − All Dwellings
Dec 2013: 127.12
Peru (Lima) − All Dwellings
Dec 2014: 177.50
−40
020
40
Mexico − All Dwellings
Q1
2011
= 1
00
6080
100
140 Dec 2014: 118.60
China (Beijing) − All Dwellings
Mar 2015: 119.13
Hong Kong − Residential Prices
Feb 2015: 163.06
−40
020
40
Indonesia − Major Cities housing
Q1
2011
= 1
00
03 04 05 06 07 08 09 10 11 12 13 14 15
6080
100
140 Dec 2014: 130.00
India − Major Cities housing
03 04 05 06 07 08 09 10 11 12 13 14 15
Dec 2014: 185.55
Singapore − All Dwellings
03 04 05 06 07 08 09 10 11 12 13 14 15
Mar 2015: 102.25
−40
020
40
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Philippines (Manila) − FlatsQ
1 20
11 =
100
6080
120
Dec 2014: 139.96
Japan − All Dwellings
Dec 2014: 102.50
Australia − All Dwellings
Dec 2014: 117.14
−40
020
40
New Zealand − All Dwellings Big Cities
Q1
2011
= 1
00
6080
120
Dec 2014: 134.35
Turkey − All Dwellings
Feb 2015: 167.95
South Africa − Residential
Apr 2015: 108.62
−40
020
40
Israel − All Dwellings
Q1
2011
= 1
00
6080
120
Jan 2015: 125.57
Korea − All Dwellings
Mar 2015: 109.77
Russia − All Dwellings (Urban)
Dec 2014: 125.83
−40
020
40
Euro zone − All Dwellings
Q1
2011
= 1
00
03 04 05 06 07 08 09 10 11 12 13 14 15
6080
120
Dec 2014: 96.99
Canada − New Houses
03 04 05 06 07 08 09 10 11 12 13 14 15
Feb 2015: 107.87
US − New Single Family Houses
03 04 05 06 07 08 09 10 11 12 13 14 15
Dec 2014: 127.21
−40
020
40
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Global Business Indicators
Global Manufacturing PMI Reports
The Purchasing Managers’ Index (PMI) is an indicator reflectingpurchasing managers’ acquisition of goods and services. An index read-ing of 50.0 means that business conditions are unchanged, a numberover 50.0 indicates an improvement while anything below 50.0 suggests
a decline. The further away from 50.0 the index is, the stronger thechange over the month. The chart at the bottom shows a moving av-erage of a number of PMI’s, along with standard deviation bands toshow a global average.
Purchase Managers Index (Manufacturing) − China, Japan, USA, Canada, France, Germany, Italy, UK, Australia
04 05 06 07 08 09 10 11 12 13 14 15
3040
5060
70
3040
5060
70
Business Conditions Contracting
Business Conditions Expanding
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Global Manufacturing PMI Chart
This is an alternate view of the global PMI reports. Here, we lookat all the various PMI data series in a single chart and watch theirevolution over time.
Red numbers indicate contraction (as estimated by PMI) whilegreen numbers indicate expansion.
The OECD calculates import and export values for member coun-tries. Figures are seasonally adjusted and measured in billions of USdollars. Red lines indicate exports, while blue lines indicate imports.Green lines indicate the zero level.
The top part of the graph shows the changes in exports and importson a year-over-year basis, while the bottom part shows the differencebetween exports and imports for that given month (i.e. the trade bal-ance)
Series Dates May 2015 Apr 2015 Apr 2015 Apr 2015 Apr 2015 Apr 2015 May 2015 May 2015� France -10.9 s 10.5 u 0.44 t 104.7 s 109.5 s 0.1 s -18.5 t 49.4 s� Germany 1.5 s 4.7 u 0.12 t NA 115.9 s 0.3 -8.0 t 51.1 t� United Kingdom 4.8 s 5.4 u 1.65 s 113.0 s NA 0.0 u -1.0 t 52.0 s� Italy -0.4 s 12.4 t 1.36 s 100.0 s NA -0.1 t -10.9 t 54.8 s� Greece -0.6 s 25.6 u 12.00 s NA NA -1.8 s -27.4 s 48.0 s� Spain 2.4 t 22.7 t 1.31 s NA NA -0.7 s -1.9 s 55.8 s� Eurozone (EU28) -0.4 s 9.7 u 1.26 t 106.2 s 109.5 s -0.1 s -10.7 t NA
Tracking the Chinese economy is a tricky. As reported in the Fi-nancial Times, Premier Li Keqiang confided to US officials in 2007 thatgross domestic product was “man made” and “for reference only”. In-stead, he suggested that it was much more useful to focus on three alter-native indicators: electricity consumption, rail cargo volumes and bank
lending (still tracking down that last one). We also include the PMI- which is an official version put out by the Chinese government anddiffers slightly from an HSBC version. Finally we include the ShanghaiComposite Index as a measure of stock performance.
Temperature and precipitation data are taken from the US NationalClimatic Data Center and presented as the average monthly anomalyfrom the previous 6 months. Anomalies are defined as the difference
from the average value over the period from 1961-1990 for precipitationand 1971-2000 for temperature.
Average Temperature Anomalies from Nov 2014 - Apr 2015
<−4.0 −3.0 −2.0 −1.0 0.0 1.0 2.0 3.0 >4.0Anomalies in Celcius WarmerCooler Anomalies in Celcius
−4 −2 0 2 4
Average 6 month Precipitation Anomalies from Oct 2014 - Mar 2015
<−40.0 −30.0 −20.0 −10.0 0.0 10.0 20.0 30.0 >40.0Anomalies in millimeters WetterDrier Anomalies in millimeters