The most recent round of PMI data certainly looks like a win for supporters of quantitative easing. Two countries that have been the most consistently aggressive with monetary policy since 2008, the US and UK, appear to be the two hottest economies in the world.
Overall, global PMI composites continue to show modest expansion. Europe appears to be recovering slightly, while emerging and related economies generally look weak. Of particular note, Australia’s manufacturing PMI fell to 42 and has indicated contraction for 25 straight months. Is it a coincidence that Australia’s central bank was one of the more restrained banks coming out of the financial crisis?
Maybe it shouldn’t be too surprising that monetary stimulus appears to have stoked economic activity, but the time frame may still be too short to definitively close the book on QE’s efficacy. Assuming that there are no free lunches, the costs of aggressive policy remain to be seen.
Source: Markit Economics