If there is any truth in the latest surveys, global manufacturing is in for a boom, but in the euro area, the good times really are set to begin.
Best ever! That is a bold statement, but it appears that the countries that make up the euro area, are seeing their best ever growth in manufacturing.
The rest of the world is not doing badly either, just not as good as the euro area – except for Sweden that is growing like an Ikea bed from its parts.
The purchasing managers indexes – PMIs – covering manufacturing are closely watched. Any reading over 50 suggests growth. Any reading close to 60 suggests it is time to get excited. Any reading over 60 suggests it is time for headline writers to get their hyperbole ink out.
The latest manufacturing PMIs tracking China were good – 51.5 suggesting the economy is picking up. For India, at 54.7, the index was at a five-year high.
In Central Europe, the PMIs pointed to annual growth in manufacturing of 10 per cent, and the PMI for Turkey is at its highest level since 2011.
In the US, the latest PMI is at 55.1, a 33-month high, while in the UK, the index dropped back from November’s reading of 58.2 but at 56.3 is still consistent with quarterly growth of 1.5 per cent in manufacturing.
In Sweden, the index is at 60.4 – leading some to claim the economy there is over-heating.
As for the euro area, the index is at an all time high in Austria, Germany and Ireland, a fraction off an all time high in the Netherlands, a 207-month high in France and a 114-month high in Greece.
For the region as a whole, the index is at 60.6. But since inflation in the region is so modest and unemployment so high, at this stage there isn’t even a whiff of the economy overheating.
The good times seem to be returning for the euro area, but in the UK, at least regarding manufacturing, the runes seem pretty good.