Wall Street is obsessed with COVID these days and rightly so.
The Purchasing Managers Index (PMI), based on surveys of supply-chain managers, is generally regarded by the financial market as the best overall leading indicator of economic cycles. The data for August released this week paint a picture of diverging momentum among some of the largest economies in the world, especially in the most important sector of these economies – the service sector:
- While the US service PMI fell again (to 55.2), its third consecutive month of decline, the Chinese service PMI jumped by more than four points to 54.9.
- While the UK service PMI fell to a 6-month low, German service PMI came in near its multi-year high reached last month.
What is driving this economic divergence?
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