Welcome to our PMI Watch where we look at the odds of betting on a rebound in the most followed growth gauge.

Before addressing the S&P PMI numbers released for January on Wednesday (and the ISMs later this month), we’d like to point you in the direction of the seasonality adjustment issues still facing the statistical bureaus.

January 2023 was a month of records in seasonal adjustments due to the outlier filter of 2021/2022 wreaking havoc with typical X13-ARIMA-SEATS models. For example the ISM Services received by far the most “spreadsheet aid” in history with a seasonal discount factor of less than 0.9 (index value is divided with the factor to get the SA number).

This ought to make January 2024 look less strong in comparison, but will likely also lead to the conclusion in the SA models that January 2024 needs less artificial spreadsheet aid to adjust for seasonality.

This leaves a negative bias on the table for the PMIs already before looking at recent developments.

Chart 1: Adjustments were record positive in January 2023, but they will not be in January 2024