Across the globe this week, a major signalling macroeconomic indicator published by many statistics bureau is the Manufacturing Purchasing Managers’ Index (PMI) for the month of August, 2020.
major economies, Global manufacturing activities
The Manufacturing PMI is a composite index, used to measure the overall performance of the manufacturing sector of an economy (on monthly basis) by aggregating the trends in Production level, New orders, Supplier delivery time, Employment level, and Raw material inventory for the month.
Given the significance of the manufacturing sector contribution to an economy’s GDP, the Manufacturing PMI is an established leading indicator of what the performance of an economy’s GDP would be in the nearest quarter-end.
A PMI above 50 index points indicates that the manufacturing activities of an economy have expanded compared to the prior month; a PMI below 50 index points indicates contraction in manufacturing activities relative to the prior month; while a PMI of 50 indicates no change from the previous month position.
From the data released across the tracked economies, we noticed a broad-base recovery in Manufacturing PMIs in the month of August 2020; an indication that manufacturing activities are beginning to pick up across the globe, post-COVID-19 pandemic induced lockdown.
Specifically, of the six economies of interest, the August 2020 Manufacturing PMI settled above 50 index points in the U.S., China, UK, Germany, and South Africa, save for Nigeria whose PMI (though better than the last three months) settled at 48.5 index points.