Chart of the Day: Here’s solid proof that the manufacturing sector will not recover anytime soon

PMIs will rise, but not for long.

The headline purchasing managers’ index (PMI) may rise in coming months, but analysts warn that an uptick will not spell a recovery for the struggling manufacturing sector.

“PMI figures are not seasonally adjusted. A look at last year’s numbers saw manufacturing PMI venture briefly into the expansion territory in May and June after the Chinese New Year period before eventually slipping back into contraction again from July onward,” DBS said in a report.

DBS noted that once the seasonal effect was removed, the PMIs had actually been stuck at contraction levels all along and had not improved at all.

“This month’s numbers seem to suggest that things could be panning out in pretty similar fashion,” DBs noted, referring to the latest manufacturing PMI of 49.8 for May.
“Those who have been calling for ‘green shoots’ in the manufacturing sector may soon find themselves staring at a bunch of weeds,” DBS warned.

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