What's going on?
Raise a glass to the global manufacturing industry: it put on its hard hat and went to work in March, according to fresh survey data out Thursday.
What does this mean?
Monthly business activity surveys ask managers how busy they’ve been compared to the month before, giving economists a near-real-time picture of how the economy’s doing. And the eurozone’s doing well, or at least it was before this week’s latest lockdowns: its overall economic activity increased in March for the first time since September. That was largely down to its manufacturing industry’s highest–ever activity levels, with Germany a particularly standout performer.
Manufacturing updates from the UK and US weren’t to be sniffed at, either: British factory activity grew at a faster pace than expected last month, while Stateside figures hit their highest since 1983.
Why should I care?
For markets: Global growth is getting it together.
When the world’s major economies are all heading in the same direction and happily buying and selling among one another, growth’s said to be synchronized – and momentum builds up. Just as well, then, that China’s singing from the same hymn sheet: its manufacturing activity data – out earlier this week – was ahead of economists’ expectations. That might help explain why the International Monetary Fund is set to increase its global economic growth forecasts next week.
Zooming in: Believe the hype, but not too much.
Economic activity surveys focus on a single month, but they’re arguably better at gauging economic activity across several. That’s partly because the surveys only show the number of firms reporting higher, lower, and unchanged activity, and not the extent of any changes. But the issue is easily solved: a moving average that puts more weight on recent data should better reflect the reality behind the headlines.