馃攳
To Gauge How the Economy Is Doing, Ask Purchasing Managers | WSJ - YouTube
Channel: unknown
[0]
(pleasant mallet percussion music)
[1]
- [Narrator] Here's a chart that anyone
[2]
who looks at the economy is
going to pay attention to.
[5]
It's a purchasing managers' index, or PMI.
[8]
This one looks at global manufacturing.
[11]
50 represents the midline between
expansion and contraction.
[15]
When the line rises above
50, it suggests manufacturing
[18]
is increasing or improving.
[20]
When it dips below, it
suggests a decrease.
[23]
In 2018 and 2019 during
the U.S.-China trade war,
[27]
investors embraced
global manufacturing PMIs
[30]
as a leading barometer of economic health.
[33]
Traders and policy makers looked to them
[35]
to answer the question,
[37]
how will Trump's trade policy
affect the world's economy?
[41]
And several times over those years,
[42]
the earliest and clearest
cracks showed up in PMIs.
[47]
To understand what makes PMIs so popular,
[49]
first you have to
understand how they work.
[51]
(pleasant mallet percussion music)
[57]
For a scan of what's
going on in the economy,
[59]
PMIs survey the world's
purchasing managers.
[62]
- The purchasing manager is
the executive within a firm
[65]
who's responsible for buying
everything, essentially.
[68]
This could be the inputs that
go into the production line
[71]
or it could be the desks
required for new employees.
[74]
- [Narrator] A purchasing manager sits
[76]
at an important juncture in
a company's supply chain.
[79]
- The purchasing manager's
the right person to speak to
[81]
because he's got access to
a wonderful source of data,
[84]
whether that's how much the
firm's gonna be producing
[86]
in the next few months,
[87]
whether it's taking on more employees,
[90]
whether its inventories are high
[93]
and it's gonna have to start
scaling back on its purchasing.
[96]
The purchasing manager
[97]
really knows everything about the firm.
[98]
- [Narrator] For PMIs, purchasing
managers answer questions
[101]
about what's going on on the ground.
[103]
Compared to a month ago,
have there been changes
[105]
in production, new orders,
prices, or backlogs.
[109]
For each question,
[110]
the managers can give
one of three answers,
[113]
higher, the same, or lower.
[116]
The index assigns a different value
[118]
to each of those answers.
[119]
Higher gets a one, the same gets a .5,
[122]
and lower gets a zero.
[124]
The answers are then added up,
[126]
weighed, and averaged into a score,
[128]
and these scores are plotted
onto a chart, like this one,
[132]
where the 50 line marks the middle
[133]
between growth and contraction.
[136]
When a manufacturing PMI
slides and dips below 50,
[139]
policy makers take notice.
[142]
Through most of 2018,
[143]
official forecasts like those
from the Federal Reserve
[146]
and International
Monetary Fund held steady,
[149]
and until the fourth quarter,
the stock market climbed,
[152]
but global manufacturing PMIs
[154]
were telling a different story.
[157]
You can see it here.
[158]
For much of 2018, manufacturing
output was sliding.
[163]
Then, in June of 2019, it dipped below 50,
[166]
implying a downward pull on the economy.
[170]
- It's the most up-to-date
source of information
[173]
on business conditions,
so that's got an advantage
[177]
over data such as GDP,
[179]
which often tends to
be produced with a lag.
[181]
Having up-to-date information
is especially important
[184]
for policy makers setting interest rates.
[186]
If you can get a quick view
on how the economy's changing,
[191]
you can adjust interest rates faster,
[194]
meaning less adjustment is needed.
[196]
If you wait until the economy's
already in a recession,
[200]
then you're gonna have to
start slashing interest rates,
[203]
but if you got an indication
[204]
that the economy's
edging towards recession,
[207]
you only need to do a small
tweak to interest rates.
[210]
- [Narrator] Track the PMI numbers
[211]
against news flow on the trade war,
[213]
and you can see them line up.
[215]
The blue line shows new export orders
[218]
and the red and green lines show news flow
[220]
on the U.S.-China trade war.
[223]
Red lines are when talks
moved in a negative direction
[226]
and green lines are when
they moved positive.
[229]
Right here, where the line turns around,
[231]
that reflects the Fed's
policy shift in 2019.
[235]
Officials began easing
policy after indicators
[238]
like the PMI began to show
the economy was softening.
[241]
PMIs drew attention during this period
[243]
because they aren't revised
[245]
the way some government data series are.
[247]
Revisions are useful, but
they can make the trend
[249]
and the data harder to see.
[251]
- There's a lot of economic
official data out there
[254]
which also gets revised heavily,
sends misleading signals,
[257]
so the PMI's really useful in
acting as a challenger data
[261]
to some of those GDP
numbers, employment numbers
[263]
to make sure the policy
makers have confidence,
[266]
even in the official data
that they're watching.
[268]
(pleasant mallet percussion music)
Most Recent Videos:
You can go back to the homepage right here: Homepage