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3-min Video: Exclusive Early Cycle Indicator poses questions on recovery

16 June 2015 | Analyst Insight

(LONDON) Market expectations of the performance of the world’s metal bashers in full-year 2016 look over-optimistic after Liberum’s proprietary Early Cycle Indicator for May continued to flatline.

The monthly Indicator, created by Liberum’s European Capital Goods Analyst Daniel Cunliffe, weights new orders from the Purchasing Managers Indices versus inventories in Europe (50% of the Index), the US (30%) and China (20%).

Click on the video below to hear Daniel explain the numbers.

ECI DC Thumb

The ECI is 80% correlated with volume growth at giant global industrial firms and offers a six-to-nine month lead on trends. The early cycle refers to the critical period after a slowdown when companies buy smaller items such as ball bearings or drill bits for products sold, or projects delivered, in the near term.

Late cycle refers to major capital expenditure such as factories and power plants that meet rising demand from the early circle.

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