The purchasing managers’ surveys are reasonable coincident indicators of economic activity. The charts below show quarterly GDP growth together with a weighted average of PMI new business indices covering the manufacturing and services sectors for the US, Eurozone, UK and Spain.

Somewhat surprisingly, the UK PMI indicator has held up best in early 2008, suggesting growth of about 2% annualised. The Eurozone indicator has also been relatively resilient, while US surveys look consistent with a flat economy, supporting other evidence that a fall in GDP may have been avoided in the first quarter.

The stand-out, however, is the collapse in the Spanish PMI indicator. The government plans significant fiscal stimulus but can the ECB continue to ignore a developing recession in the Eurozone’s key locomotive economy of recent years?