Looking Beyond the Crimea—Economic Edition

A number of positive economic data releases this week were overshadowed by the events in Eastern Europe.


Globally manufacturing data showed expansion in the month of February. Photo by Sarah Glenn/Getty Images.

While investors watched the events in Eastern Europe this week, the rest of the world kept turning—factories kept producing and consumers, well, consumed. And a number of economic data released while Vladimir Putin pushed into the Crimea suggest the global economy is still moving at a decent clip.

For instance, the US’s February ISM Manufacturing Purchasing Managers Index (PMI) rose to 53.2, up from January’s 51.3 (readings above 50.0 indicate expansion). Markit’s UK Manufacturing PMI also accelerated in February, rising from 56.6 to 56.9. Factory output in the eurozone’s four biggest economies grew simultaneously for the first time in nearly three years.

And around the world, manufacturing PMIs from Canada and Mexico to India and Taiwan showed readings indicating expansion. Even much-maligned Greece—driven largely by rising new orders—expanded for a second consecutive month in February. While China's manufacturing PMIs slowed, this is evidence more of economic rebalancing from production to services than economic weakness. China’s February service sector PMI accelerated to 51.0 from January’s 50.7.

Other service sector PMIs released this week showed growth, too. The US’s February Non-Manufacturing PMI slowed to 51.6 from 56.4 in January, still good enough for the 49th straight month of growth, and not too shabby when you consider the severe winter weather plaguing most of the country. Tellingly, one of the biggest detractors was a contraction in the employment index—a backward-looking factor—while more forward-looking new orders grew faster. The UK’s services PMI also slowed, but still expanded for the 14th consecutive month at 58.2, with strong gains in output and new business. Eurozone services, led by Germany, rose to 52.6, a 32-month high. Irish services slowed to a still-strong 57.5, with new orders rising. Japan’s service PMI contracted a bit at 49.3, but there, too, new orders rose.

To round out the list, Aussie construction permits, exports and retail salesall grew solidly—and the apparent skepticism about the sustainability of that growth is bullish. US personal spending rose +0.4% m/m in January, led by services, and income rose +0.3% m/m after a flat December. Final US productivity data showed a 1.8% annualized increase—a bit slower, but still evidence technology is advancing and firms are finding ways to become more efficient. The UK’s February construction PMI slowed to 62.6 from January’s 64.6—still robust, and all the more impressive in light of recent flooding.

This all speaks to why localized skirmishes typically don’t hold much sway over stocks over time. The conflict is certainly an economic negative for the Ukraine, but the remaining 99.8% of the global economy didn’t stop. Stocks give you a share in all this commerce, and they won’t stop either.

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.