Here is why markets care what businesses are buying

The author takes a close look at economic indicators for better understand of what's going on

After all the geopolitical turmoil that gripped financial markets in 2016, some bright news started to emerge as we approached the end of the year.

In economies from Australia to China, Germany to the United States, and even in perennial strugglers like Italy and Japan, the Purchasing Managers’ Index (PMI) is signalling an improvement in the economic outlook.

Historically, PMI has correlated closely with economic output. For example, the graph below shows that US PMI, produced by the