From a momentum standpoint, global manufacturing peaked in September 2013 and has been steadily slowing, at least in terms of breadth, since then. In order to understand the global manufacturing sector we have created a variety of diffusion indices using the Markit Manufacturing PMI Data. In each of the first three charts below, we are tracking 15 different country manufacturing PMI indices. If a PMI series is positive over the time frame we are looking at, it registers a +1 in our diffusion index. If it is negative, it registers a -1. Consequently, the maximum value of our diffusion index is +15 and the minimum value is -15. In September 2013, all 15 PMI series were higher than they were one year early. As of 3/31, the 1-year diffusion index stands at only -7 (11 are lower and only four are higher). This is a slight improvement from 2/28 when the index stood at -9.
The good news is that there are early indications that the negative momentum is abating. The one-month diffusion index moved to +9 in March, which is the highest level since August 2013. In addition, the six-month diffusion index is back on the right side of 0.
We also track 13 new order series and momentum looks like it is improving here as well. The one-year diffusion index stands at -5. However, the three-month diffusion index is positive at +3 and the six-month diffusion index is at +7.
Overall, global manufacturing has been slowing for nearly two years according to these PMI series. However, there are a few signs that we may have reached the bottom of this cycle and manufacturing may pick up from here.