Chart of the month: Signs of Recovery

  • 08 July 2020
  • 5 mins reading time

Some forward-looking data are showing signs of improvement

Data shown: Purchasing Managers’ Index US data produced by ISM. Source: Schroders Personal Wealth/ Bloomberg, 3 July 2020

This chart shows the Purchasing Managers’ Index or PMI data for the manufacturing and non-manufacturing sectors in the US. Each month, several thousand purchasing managers are surveyed to find out their expected sales and inventory numbers for the coming 30 days.

These data are compiled to create an index number that ranges between 0 and 100. Above 50 indicates expected expansion, below indicates expected contraction.

As the chart shows, the virus-driven lockdown knocked expectation deeply into contraction territory in 2020. However, we have since seen signs of a less negative outlook with the general consensus indicating a return to growth in the manufacturing sector.

It will take months if not one or two years to recover from overall loss of production but, providing we can prevent a second wave of contagion, there are indications that the recovery has begun.

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Forecasts of future performance are not a reliable guide to actual results in the future; neither is past performance a reliable indicator of future results. The value of investments, and the income from them, may fall as well as rise and cannot be guaranteed and the investor might not get back their initial investment.

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