The PMI data for US and Europe, which is an excellent leading indicator of manufacturing and economic activity in general, was a real mixed bag. While the US report suggests manufacturing is making up for lost time in Q4, the EU report is concerning. It seems that markets are a bit blasé about the need for the ECB to actually step up and do what ever is necessary, as currently it isn't doing very much.
As I've written before, better activity in Germany is irrelevant to solving the woes afflicting Europe if it doesn't help drag more troubled countries towards growth. And the latest PMI data suggest that while Germany is picking up, improvement elsewhere is fleeting. PMIs for France and Italy fell in February and while its improving in Spain, the pace of improvement is hardly exciting.
The US ISM report was much healthier. All the components were solid and the headline index is at high levels.
Its hard to know at this stage whether manufacturing is just making up for a flat Q4 or whether it can maintain its current pace beyond the next quarter or so. My guess is that it will probably slip into a lower groove in a few months, but still maintain growth.
On aggregate, the global PMI was unchanged MoM. But that doesn't speak to the risks particularly in Europe. While the ECB can ultimately sort it out, to me assuming that they will without the spooking markets seems to high, particularly on the back of the steep rally in the last few months.
