According to a Markit Economics survey of 30 nations’ purchasing managers, the world’s leading manufacturing nations began the year considerably better than expected. The Markit survey showed its Global Manufacturing Purchasing Manager’s Index had risen from 50.2 in December to 51.2 in January, with a number over 50 indicating expansion.

This number and other recent data from several large manufacturing countries support a more favorable outlook for the global economy. In addition, as a result of silver’s dual role as both a precious and industrial metal, an expansion in anticipated manufacturing activity tends to boost silver prices since it often is a leading indicator of increased industrial demand.

Furthermore, many investors were concerned that the Greek-led sovereign debt crisis would have a depressive effect on the outlook of purchasing managers. Nevertheless, this does not seem to be the case yet, because as Greece approaches default, surveys of purchasing managers around the world are indicating an increasingly expansive outlook for the global economy.

United States and Chinese Purchasing Managers Show Expansion

Activity for factories rose in China during the month of January, with Chinese Manufacturing PMI rising to 50.5 — a number above 50 indicates expansion — versus an expected print of 49.8, with the previous number of 50.3.

Chinese factories supply many consumer products all over the world and an increase in Chinese PMI affects many of China’s trading partners such as Australia, the European Union and the United States.

For its part, the Institute for Supply Management released its survey of purchasing managers in the United States, which showed continued growth in January. The number came in at 54.1, which was slightly below the analyst consensus of 54.6, but it was still higher than the December figure of 53.9 and demonstrated a continued uptrend.

UK, Eurozone and German PMI Also Show Improvement

In addition to Chinese and U.S. PMI surveys showing improvement, Markit/BME German PMI moved back over the 50 neutral zone to 51 from 48.4 for the first time since September of 2011.
UK Manufacturing PMI also rose substantially in January, printing at 52.1, from a previous 49.7, with a consensus of 50.1.

Nevertheless, Eurozone Final Manufacturing PMI showed only marginal gains at 48.8 from a previous 48.7, and remains in the contraction zone below 50. Despite the Eurozone’s PMI lagging somewhat in January, indications from other purchasing managers point to an expanding global economy in 2012, making a stronger case for holding silver.

By Dr. Jeff Lewis

Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com and Hard-Money-Newsletter-Review.com

Copyright © 2012 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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