January 31, 2024
Manufacturing Purchasing Managers’ Indices (PMIs), which measure month-over-month changes to economic activity within manufacturing sectors in the U.S., Eurozone and U.K., bottomed in the third quarter of 2023, having steadily improved since then.
The U.S. manufacturing PMI is in expansion territory, denoted by a level above 50, after coming in at 50.3, its highest since October 2022. Cooling inflation, heightened demand, and increased business confidence have all contributed to the recovery.
In contrast, manufacturing activity in the Eurozone and U.K. has lagged the U.S. Although both PMIs remain in contraction territory, they have improved, reaching their highest levels since last April.
Manufacturing has historically been a reliable gauge of overall economic health. We believe the synchronized improvement in global manufacturing reduces the odds of a recession, aligning with our expectation for a soft landing.
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