Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
As the first to reopen, Asian economies offer guide on the
shape of global recovery
Despite facing a 'double-dip' in most sectors, there are signs
of stabilisation
Going forward, PMI sector data will help map the recovery in
other regions such as the US and Europe
April PMI data pointed to a severe contraction in global
business activity, with the coronavirus pandemic and resulting
lockdown measures crippling economies around the world. The J.P.
Morgan Global Composite PMI™ plunged to a new low, eclipsing the
previous record set during the global financial crisis, as 57 of
the 64 national surveys* registered unprecedented declines in
output.
Beneath the surface of the global trend, we saw two broad
themes. Firstly, economies facing their first full month of
lockdown suffered historic contractions in business activity. This
included countries like the US, Mexico and India, as well as many
European and Middle Eastern nations. Meanwhile, the picture in some
East Asian economies was slightly different, most notably in China.
In these countries the coronavirus outbreak was most severe in
February but has been somewhat contained over the past two months.
April PMI data reflected that trend, as although output
contractions in the region were sharp, they were often slower than
those in other parts of the world.
The 'double-dip'
The divergence between regions can be seen even more clearly
when looking at PMI sector data. For example, when comparing the
six broad sectors which have been severely hampered by the
coronavirus pandemic - Basic Materials, Consumer Goods, Consumer
Services, Financials, Industrials and Technology - there is a stark
difference between regions. In the US and Europe, each of these six
sectors registered a sharp contraction in activity during March,
followed by accelerated declines in April. This is consistent with
the timing of lockdown measures imposed in the US and many European
countries; an initial implementation at the end of March, followed
by a full month of restrictions during April.
Meanwhile, Asian sector data align more closely with the earlier
imposition and removal of measures seen in that region. Across the
same six sectors, five recorded their sharpest contractions in
February. This was followed by softer reductions in March as
restrictions were pared back, before a reacceleration in declines
as the effects of deteriorating international demand hit in April.
The only exception was consumer services which has been
increasingly hindered as the virus spread around the world.
The Asia data show a clear 'double-dip' and highlights that
although some declines were softer than during the peak of the
outbreak, the region still faces a challenging recovery. That said,
there was some positivity to be gleaned from the latest release of
Asia sector data.
Early signs of recovery
Not only does PMI sector data track business conditions across
broad market segments, there are series available for specific
sub-sectors. The April sub-sector results were particularly
interesting in Asia, where both Metals & Mining and Machinery
& Equipment posted softer output declines for the second month
in succession. The latest readings suggest that contractions in
these sub-sectors may be bottoming out and that they could be among
the first to record an expansion following the outbreak. In the
months ahead, Asia PMI sector data could act as an early guide on
which sectors are the first to emerge from the global crisis.
Will the rest of the world follow?
Although Asia can act as a guide for the rest of the world,
regional idiosyncrasies will likely see sectors recover at
different rates in different parts of the world. All PMI sector
data will therefore play an important role in accessing the shape
of global recovery. During the pandemic, the US data have revealed
a vast outperformance by Healthcare companies. Upcoming releases of
PMI sector data will give the first insight into which sectors will
narrow the gap.
The timely nature of PMI sector data, released just five working
days after the end of a reference period, makes it an invaluable
tool for guiding both business and investment decisions. That
importance is heightened in a time of uncertainty such as that we
are currently experiencing. The next release of global PMI sector
data on the 5th of June will include May figures, giving an early
indication of global and regional economic trends, with US, Europe
and more Asian economies reopening businesses gradually.
*Only includes Manufacturing, Services and Whole Economy
surveys
Purchasing Managers' Index™ (PMI™) data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.
