The PMIs for August are in and the weighted manufacturing new orders for the G5 continued to slide. The G5 index fell to 47.2, down 3.2 points from it's recent peak in April (chart1). The weakest showing in August was in the Western hemisphere: the average of the ISM and S&P PMI's in the US fell 2.1 points to 45.4, while
Eurozone new orders fell by 0.8 to 43.3. Sector new orders index for autos at 34, as a flood of Chinese imports of EVs ahead of new tariffs due for October intersects with cautious consumer demand for conventional vehicles. See also the recent statement by Volkswagen on its planned closure of plants in Germany.
The service sector across the G5 is more robust, but generally only just in expansion territory at 51.3. Historically, the manufatcuring sector often leads the servics sector at turning points, but global net earnings revisions often lead the manufacturing PMIs. And earnings revisions have been nudging higher in recent months. So the most timely clue about where the PMIs go next will probably come from the earnings data: if net upwards earnings revisions turn down in coming weeks there will more decisive reasons to worry.
(Americas and Europe RHS, Asia LHS)
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