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Posted by on Apr 2, 2015 in Laif Meidell, Market Insight

Manufacturing Accelerating in Much of the World

By Laif Meidell, CMT, president of American Wealth Management, and portfolio manager of the AdvisorShares Meidell Tactical Advantage ETF (MATH)

Economists had been hoping Japan’s growing manufacturing sector was an indication of a stronger workforce that would lead to an improvement in household spending. However, economic concerns out of Japan overnight sent U.S. stock futures lower as data suggested the manufacturing sector was still growing but at a decelerating pace.

In other parts of the world, manufacturing appears to be accelerating. For the month of March, the Chinese Purchasing Managers index rose to 50.1 from 49.9 in February. Any reading of 50 or above implies expanding manufacturing activity. Clearly, improving economics coupled with China’s policymakers’ suggestion over the weekend that they were considering a quantitative easing boost to their economy is drawing investors to the Chinese stock market. This week, China is at the top of our list of countries, with the FTSE China 50 index gaining 6.32 percent over the past five trading days.

Even out of the eurozone, manufacturing appears to be picking up, specifically in countries such as Spain, Italy, France and Germany. As a whole, the eurozone PMI for March was 52.2, above the February reading of 51.0. These are the strongest PMI readings coming out of the eurozone since the mid-2014 and appear to indicate that the monetary stimulus, in addition to the boost in discretionary spending caused by lower oil prices, is helping to bolster the eurozone’s recovery.

On Wednesday, the manufacturing data from the U.S. was somewhat mixed, with the U.S. PMI manufacturing data for March coming in at 55.7, above February’s reading of 55.1. However, the ISM manufacturing index for March fell slightly to 51.5 in March versus the February reading of 52.9. The strong U.S. dollar is having a ripple effect through the manufacturing sector, with the ISM’s weaker U.S. manufacturing numbers for March caused by declining foreign demand for U.S. goods.

This commentary originally published in the Reno Gazette-Journal. Performance numbers used in this article were obtained through eSignal and are not guaranteed to be accurate.

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