By Jeremy Glaser and Robert Johnson, CFA|
9-23-2015 12:00 PM
U.S., Europe Chug Along as China Slows
Purchasing-manager data this week shows stability in the U.S. and European economies as China continues to struggle, says Morningstar's Bob Johnson.
Jeremy Glaser: For Morningstar, I'm Jeremy Glaser. With the Fed standing still until they get confirmation that global growth is back on track, I'm here with Bob Johnson--our director of economic analysis--to look at the global PMI data to get a snapshot of what's happening.
Bob, thanks for joining me.
Bob Johnson: Jeremy, great to be here today.
Glaser: Let's start with these world PMIs. It's data compiled by Markit. It tells us a little bit about what's happening across the globe. Why has this metric become so important? Why are people watching this so closely?
Johnson: Well, it's purchasing-manager data, and they compile it very quickly. It's the very first set of data available on every month, and this report is actually a flash report for September based on some initial surveys. So, it comes very quickly, and the reason it comes so much quicker than anything else is, like all purchasing-manager surveys, they generally ask if things are better, the same, or worse--it's a so-called diffusion index. They don't sit there and try to figure out exactly what sales were--in which case, you'd have to close the books and count everything. Instead, you can ask people how they feel about the numbers--are they better, the same, or worse? So, they can get to the numbers very, very quickly, and it gives you a really good feel.
And if there's a little accounting gimmick that helped the numbers along somewhere that might have made it on the books, just asking the purchasing managers the general tone of things perhaps provides a more honest and consistent answer than some of the other data. So, they've been beloved for a long time, and now they've spread so that they are available for a lot of countries and done with different partnerships. Markit compiles a bunch of them, and today we've got some of that data.
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