Manufacturing Turnaround As Lead Economic Indicator

For us, manufacturing conditions signify as a prime indicator to signify the state of an economy. This also applies to the world.

According to the Economist, ``SURVEYS of purchasing managers indicate that manufacturing industries in most of the world’s big economies are growing. In big emerging economies such as Brazil, China and India, the indices compiled by Markit, a provider of financial information, were well above 50 in January, indicating robust growth. In each of those countries manufacturing was still shrinking in January 2009. There has also been a pronounced turnaround in America, where the Institute for Supply Management’s index for January was 58.4, in contrast to 35.5 in January 2009. Manufacturing is also expanding in Germany, France and Britain. But it is still shrinking in Greece and Spain, though much less markedly than a year earlier."

From Danske

While manufacturing conditions may slow from their recent turbocharged activities, they aren't likely to "double dip" this year as alleged by perma bears-not when the steep global yield curve is likely to produce credit traction by the year end.

Graphic: BRIC Versus G7

This is graphic is a comparative from the Financial Times between major emerging economies coined as the BRIC (Brazil, Russia, India and China) relative to G7 economies.

The chart highlights both the positive and the negative aspects of the BRICs.

Nonetheless I find this an apples and oranges comparison, therefore impertinent (which is why one should be cautious with the mainstream).

The advantage of the BRICs on the left corner is predicated on the projections of future performances: growth contributions, share of the economy and growth rate.

Whereas the right corner accounts for as the disadvantages of the BRICs which reflects on the present conditions (lower per capita GDP and weak private consumption).

The comparative graphic should have shown projections on similar time dimensions, unless the FT assumes that while BRIC outperforms in growth, per capita and private consumption remains static?!