Or perhaps it’s just journalists who don;t understand economic numbers. Well, journalists and politicians then. An example here being the latest snapshots from the purchasing managers indices:
Eurozone Manufacturing PMI arrives 39.5 in May vs. 38.0 expected.
Bloc’s Services PMI stands at 28.7 in May vs. 25.0 expected.
The Eurozone manufacturing sector attempted recovery from the sharpest deterioration on record this month, the latest manufacturing activity survey from IHS/Markit research showed on Thursday.
The Eurozone manufacturing purchasing managers index (PMI) rebounded from an all-time low of 33.4 in April to 39.5 in May and surpassed 38.0 expectations while the Services PMI jumped off a record low of 12.0 reported in April to 28.7 in May vs. 25.0 expected.
No, that’s not an attempted recovery. That’s showing that it’s still getting worse.
The PMI is set so that any reported number below 50 is contraction, above is expansion. And it’s also set so that the comparator is the month before. So, below 50 means contraction from the month before. The number is below 50? That’s contraction in May from the April number, isn’t it? Even if the higher number means the contraction is slower.
We’re back with velocity and acceleration here. Things the journalistic species have terrible problems with.
As it happens, yes things are getting better and not successively worse but the particular indicator the PMI isn’t showing that. Or, as Granny always told us, don;t believe everything you read in the newspapers.