In this month of March, The IHS Markit flash purchasing managers’ index for manufacturing has fallen to a new low of 21 months. Apart from this, the services PMI has also become weak to hit a two-month low. In February, the flash manufacturing PMI had fallen from 53 to 52.5. On that occasion, the services PMI had gone down to 54.8 from a level of 56. Any kind of reading in excess of 50 tends to indicate that the conditions are improving.
The rise of new work had taken place at the weakest since April 2017. This was due to cautious patterns regarding expenditures among clients and a lot less enthusiasm as far as the business sentiment is concerned. The latest data showed the weakest increase in payroll numbers since June 2017. Overseas readings had been much worse. The flash Eurozone manufacturing PMI had fallen to 47.6 in the month of March, which was a 71-month low. Germany had gone down to a level of 44.7, a 79-month low for the largest economy in Europe.
The larger picture is that, with the bond yields suffering a fall and the yield curve getting inverted, concerns related to the US as well as the global economy are at the top of the traders’ thinking. This is especially because the Federal Reserve had responded this week by cutting back their forecast of increasing the rates of interest. The Chief Business Economist at IHS Markit, Chris Williamson said that a gap has opened up between the manufacturing as well as service sectors. He further said that the producers, as well as exporters of goods, have struggled in the middle of a deteriorating external environment. There are also concerns with regard to the impact of trade wars.
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