The Purchasing Managers Indices (PMIs) are probably the single most useful indicator of economic activity, providing a decent guide to manufacturing activity well ahead of the actual data. This is critical to commodity consumption, but also general growth given how leveraged manufacturing cycles are to GDP growth.
China is the bright spot among the data. Both the HSBC and official PMI are above 50, with the HSBC data climbing to a relatively strong 51.5. It is not unusual for the two series to diverge, with differences in seasonal adjustment and size of firms surveyed accounting for some of the difference. In any event, the HSBC data have probably best reflected the change in activity in China over the last 12 months.
The US index (called the ISM after the group that publishes the data) was somewhat stronger at 50.7, with the details of the survey suggesting it should stay above the 50 mark (which separates expansion from contraction) for a few months. So it doesn't appear there was huge damage done by the wrangling over the fiscal cliff, with markets cheering the avoidance of this risk for at least a couple of months. But even so, activity is slow.
The European indices continue to point to declines in manufacturing across the board, with Eurozone index broadly unchanged at 46.1. All countries appear to be in decline, with manufacturing in the largest countries all suffering a similar fate.
Perhaps the fact that the declines aren't accelerating have helped buoyed sentiment a little in the Eurozone. But like the US, the improvement in markets is really more to do with a reassessment of the risks now that policymakers and politicians have taken more forceful action to avoid disintegration of the EU.
At the end of the day, while policymakers may have reduced the probability of a major calamity, without stronger growth there is still a major risk that markets will reassess how rosy the outlook is. In the developed world it still looks problematic, although there are increasingly convincing signs that China is on the path for a better 2013.
