Looking for renewed vigour in global IP

The global PMI data were a little bit better on balance in June, with the drag from Japan and Europe has come to an end.  But in the grand scheme of things, industrial activity is fairly weak with plenty of downside risks.

The Chinese PMI data were weaker in June, but don't look particularly bad.  It is way to early to gauge the impact of the recent interbank squeeze on activity and perhaps its initial affect won't be particularly big. The official PMI data and the HSBC series are about where they were this time last year. While that suggests growth is slowing, this in itself isn't need for additional concern.

While the PMI data are soggy, steel production remains surprisingly strong in mid-June.  The ongoing strong rates of activity, weak steel prices and excess inventories means that when the market does adjust, its increasingly likely to be nasty.

The EU PMI were stronger and manufacturing will be back in the expansion zone soon.  This is good news, although isn't a testament to good policy but rather activity crawling off a low base.  One welcome development in this months data is that the improvement in the EU wasn't driven by Germany but by everywhere else.  This is necessary for the Eurozone to claw its way out of the current abyss.

The US ISM survey was better, getting back above the 50 mark.  But there isn't anything in the details to suggest activity is particularly vibrant and US IP growth rates have slowed alot.  So things on the activity front are far from healthy.

Leading indicators suggests we should get a small lift in YoY global IP from current run rates as negatives from Japan and Europe fall out of the equation.  As things stand, that would lift growth rates to ~3-3.5%YoY.

That is not a total disaster, but in the context of recent weakness, it leaves activity at uninspiring levels for manufacturers.  And outside of Japan, it doesn't look like policy makers are looking to change the slower status quo for manufacturing.