Synchronised global slowdown
Purchasing Manufacturing Index (PMI) data is a useful barometer for economic growth and commodity demand. We last looked at global PMIs in 2017, when they showed synchronised global growth (a tailwind for commodity prices). In 2018 PMI’s have hit the skids. Eurozone PMI growth has decreased sharply in 2018, sending a warning signal on gas & power demand growth. But most importantly for commodity markets, Chinese PMI numbers fell sharply in Nov 18 to the 50 level. Any further declines mean contraction. Weakness here is contributing to the current sell off in commodity markets.