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Nick Kounis, head of financial markets research at ABN AMRO, points out that the global manufacturing PMI slipped somewhat further in July, dropping to 49.3 from 49.4 in June.

Key Quotes

“The good news in the survey was  the rise in overall new orders (to 49.3 from 49), while the output index was flat (at 49.5). However, both indicators remain at very depressed levels, consistent with contraction. In addition, there was a  further deterioration in the new export orders index (to 48.3 from 48.8) to the weakest level since October 2012 (which was the aftermath of the euro crisis).”

“The new export orders index tracks world trade growth and at current levels is consistent with an annual decline of more than 1%. In addition, the employment index fell further (to 49.2 from 49.8) adding to evidence that the weakness in manufacturing could spill over into domestic demand.”

“Leading indicators for the PMI – such as M1 money supply growth have improved moderately over recent months and signal that manufacturing should bottom out towards the end of this year.”

“The ongoing slowdown in the manufacturing sector was also  underlined by the US ISM manufacturing index (the global PMI includes the Markit US PMI rather than the ISM). The ISM index fell to 51.2 in July from 51.7. As with the global aggregate, there was an improvement in new orders but a significant slowdown in the employment index.”