[ForexNews]

The basic story from the major PMIs still confirms a broadly improving industrial cycle. The key highlights at the broad level in terms of headlines from October have been:

● Continued improvement across a strong majority of economies. At an aggregate level, the global average PMI rose again. The gains are now larger in developed markets than in EM and the DM weighted PMI is actually above the EM version for the first time in the recovery. In fact, the EM aggregate was roughly flat in October.
● A clear reversal of the declines in two of the major economies (UK and US) that saw falls in September and a clearer rise in China, despite ‘seasonal’ headwinds.
● Underneath the surface, a clear majority showing rising new orders and a majority also still showing falling inventories, an indication that a significant part of the inventory boost in many places may still lie ahead.
● As a result the gap between new orders and inventories has continued to rise globally, with a decline in the US outweighed by strong rises in other developed markets and in EM. However, new orders in the developed markets may be plateauing so it is the fall in inventories indices that is driving the gap there now on average.

Overall, this is still a pretty positive picture that suggests further gains in production and headline indices are quite likely.