The global GDP weighted consumer sentiment index dipped slightly in September, but stayed within its upward trend, and continued its divergence against the global manufacturing PMI. That last point is worth highlighting.
Consumer sentiment is often understood to be more of a lagging/coincident indicator and hence the weakness in the PMI may flow through later. But it does beg the question once more as to whether the softer PMI readings are purely sentiment effects and simply overreaction to news headlines.
If the consumer is right then before long it will be back to business for global risk assets, but if the manufacturer is right then consumer sentiment could simply be the next shoe to drop.
BONUS CHART: Here’s the Thomson Reuters Ipsos consumer sentiment indicators arranged in GDP weighted groups for Emerging vs Developed economies. Over the past 2 years EM & DM have basically seen a synchronized improvement in consumer sentiment.
With both holding up, it further highlights the point about apparent strength in the global economy vs headline and market volatility driven sentiment effects…
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