Now here’s a chart to bolster the spirits of commodity bulls around the world.
From Macquarie Bank, it shows the relationship between global industrial production growth compared to manufacturing purchasing managers indices (PMIs) over the past five years.
According to Macquarie, the global weighted average of manufacturing PMIs hit 54.5 in September, leaving it at the highest level since 2010.
As a reminder, PMIs measure perceived changes in activity levels across a sector from one month to the next.
Anything above 50 signals that activity levels are improving while a reading below suggests they’re deteriorating. The distance away from 50 indicates how quickly activity levels are expanding or contracting.
Analysts at Macquarie described the September result as “sizzling”, suggesting that the sector is enjoying a “strong, broadening and accelerating recovery”.
More importantly, the acceleration in the PMI bodes well on the outlook for industrial production growth, something Macquarie says is “crucial for metals demand”.
On those grounds, things are certainly looking good for base metals as we approach the end of 2017.