Line chart tracking U.S., Eurozone, and China purchasing managers’ indexes (PMIs). Y-axis: Composite Purchasing Managers’ Index level; x-axis: April 2019 – March 2022. Index levels below 50 indicate contraction; above 50 indicate expansion.
From late January 2019 to late January 2020, U.S., Eurozone and Chinese purchasing managers’ indexes indicated stable or expanding manufacturing and non-manufacturing activity. The U.S. led the way through most of that period with index levels in the mid-50s. The Eurozone began the period near 50 and remained at or near that level until late February 2020. China also opened the period near 50 and remained within a few points of that level until late January 2020 when it plunged into contraction, reaching an index value of 27.5 by late February 2020. In late February, the Eurozone began a similar and even deeper decline in the index level, falling below 14. And by late February 2020, the U.S. also began a less precipitous decline into contraction, from a level of 56 to just above 53 in March and then falling into contraction with a level of just under 42 by late April.
Since those declines, all three regions have shown signs of recovery. China’s PMI level rose from 27.5 to nearly 47 by late March 2020, then increased to near 55 by late April, and by the end of Q1 2022 had declined to near 44. The Eurozone level also rose sharply from below 14 to near 53 in late March 2021 was just under 55 by the end of Q1 2022. The U.S. level rose from nearly 42 in late April 2020 to near 64 in March 2021 and stood at more than 58 by the end of Q1 2022.
Sources: Bloomberg and Wells Fargo Investment Institute. Monthly data from April 1, 2019 to March 31, 2022. PMI = Purchasing Managers’ Index. U.S. Composite Purchasing Managers’ Index level is the Institute for Supply Management Composite Index®, which is a composite index based on the diffusion Indexes of five of the Indexes with equal weights: new orders, production, employment, supplier deliveries, and inventories. Eurozone and China PMI levels use the Markit Manufacturing PMI Index, which is an index developed from monthly business surveys used to monitor the condition of industries and businesses. An index value over 50 indicates expansion; below 50 indicates contraction. The values for the index can be between 0 and 100.
- The U.S. is maintaining its role as the global growth locomotive because it is better insulated from war-related disruptions to supply and supply-chain issues.
- Global manufacturing’s healthy recovery likely will be tested in the coming months by fallout from the pandemic, particularly in Asia, and by war-related disruptions.