Economists and central bankers have been wondering for months how long demand can hold up under the growing pressure from high interest rates. Based on the deepening pessimism of the world’s purchasing managers, deep cracks in that dam of resilience have already formed – and may soon burst.
Notably, the PMI has turned negative in China, the world’s leader in manufactured goods. PMIs are slumping badly across Britain and the euro zone. Readings in the United States and Canada have also dipped into contraction. For an export-intensive country such as Canada, what is perhaps most worrisome is the rapid deterioration in the export component of the index. The reading for new export orders was a bleak 46.4 in July, the lowest this year, and the 17th consecutive monthly contraction.