First things first: the services PMI results are good, they show the strongest performance for nearly two years and they follow good results for the Indexes for manufacturing and construction. The contrast with the generally lousy figures we’ve had for output is cheering; confidence drives the business cycle so this could mark the start of an upturn.
But, as Duncan pointed out just now, we shouldn’t confuse improvement from a very low point with economic health. It’s great when you’re wheeled out of intensive care, but that doesn’t mean you’re going to run a marathon any time soon. To underline the point, look at the charts Markit have published for the three Indexes:
What they have in common is that they’re all positive but we’re still some way from the strength we had pre-recession.Of course, if we’re at the start of an up-turn we shouldn’t expect brilliant results yet and I’m perfectly happy say the PMIs are encouraging.
But it is far too soon to talk about fears of a double-dip recession being ‘unfounded.’