A further rise in G7 PMI manufacturing new orders in October is mildly supportive of the forecast here that the global economy will lift in late 2012 in lagged response to faster real money expansion since the spring. The index, however, needs to climb above the 50 level to provide stronger confirmation.

The October increase was again driven by the US component, with readings elsewhere slightly weaker.


Korean manufacturers are a bellwether of the global economy and their export expectations correlate with and sometimes lead G7 PMI new orders. A further recovery last month increases confidence that the G7 / US improvement is more than a blip.


The suggestion of an earlier post, meanwhile, that six-month global real money expansion would rise further in September has been confirmed by more complete data. Allowing for the typical half-year lead, this suggests that the incipient economic upswing will extend at least through next spring.


The real money pick-up has been broadly-based across regions / countries. The US remains in the lead, explaining the relative health of the economy – reflected in the PMI results – and equities. The Far East region ex Japan has also scored well since mid-year – stocks have outperformed since late August. Real money growth remains satisfactory in the Eurozone and UK but markets elsewhere may enjoy a stronger liquidity tailwind.

A key release for tracking the forecast here will be September OECD leading indicator data due on 12 November. A third consecutive rise is expected in a proprietary global lead measure derived from the country indicators – see previous post.