How can a company be doing worse open than when it is closed?
That’s the puzzle presented on Monday by the latest round of purchasing managers index readings across the globe, showing still depressed conditions.
“Assuming someone can be found to answer, these polls ask whether things are better or worse than last month. So investors need to consider whether the early lifting of lockdowns in May made things better than April. If they did, a correctly answered poll would give a reading over 50 (but the polls are not answered correctly),” said Paul Donovan, chief economist of UBS Global Wealth Management.
The IHS Markit eurozone manufacturing purchasing managers index rose to 39.4 in May from 33.4 in April, well below the 50 mark indicating deteriorating conditions. IHS Markit said investment-goods producers had a particularly rough month.
In Germany, manufacturing PMI was a horrid 36.6, and the readings topped out at 45.4 in Italy.
The U.K. Markit/CIPS manufacturing PMI rose to 40.7 in May from 32.6 in April.
“The improvement [in the eurozone PMI] in part merely reflects the comparison against a shockingly steep fall in April, but more encouragingly was also linked to companies restarting work as virus lockdowns were eased. The further lifting of COVID-19 restrictions in coming months should provide a further boost to manufacturers,” said Chris Williamson, chief business economist at IHS Markit.
On Twitter, Williamson tried to explain how businesses reported worse conditions when open.
In China, both the official and the Caixin manufacturing purchasing managers index were above the 50 mark.
The Institute for Supply Management’s U.S. manufacturing index edged up 1.6 points to 43.1% in May.
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