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ROB Insight is a premium commentary product offering rapid analysis of business and economic news, corporate strategy and policy, published throughout the business day. Visit the ROB Insight homepage for analysis available only to subscribers.

The global Bunny Hop Recovery continues a-halting-pace. Hop forward. Hop back.

The latest move in this going-nowhere-in-particular economic dance came from Monday's release of purchasing managers' indexes (PMIs) around the world for May. The U.S. measure, from the Institute for Supply Management (ISM), fell back to 49.0, its worst reading in nearly four years. In PMI-speak, anything below 50 implies a shrinking of manufacturing activity. (Anyone remember what was going on four years ago? Oh yeah… a recession.)

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HSBC's China PMI also hopped into contraction territory, at 49.2. Euro zone PMI came in at 48.3, continuing a 22-month slump. The composite for emerging-market PMIs slipped to 49.9. The global PMI composite came in at just 50.7 – suggesting a world economy that, overall, is spinning its wheels.

Yet not everyone was hopping backward. Britain's PMI rose to 51.3, a 14-month high. Japan's PMI inched up slightly to 51.5. And in Canada, the RBC PMI hit 53.2, its best reading in nearly a year.

From where we sit in Canada, with our suddenly sunny PMI numbers, should we be nervous? In a word, yes. A key indicator is saying that many of the world's most powerful economic engines are stalled. The global recovery is still frustratingly uneven, inconsistent and unreliable. For an export-oriented economy such as Canada's, this doesn't say much for sustaining the improved PMI trend – and that's particularly worrisome given that the near-term outlook for domestic consumer demand is decidedly weak.

But just how worried we should be, particularly about the critical U.S. number, depends on who you talk to.

In a research note, CIBC World Markets chief economist Avery Shenfeld said that dips in the manufacturing ISM to 49 or lower have historically "signalled at least a quarter of zero or negative real GDP growth" for the U.S. economy. (Only once, in 1998, has the U.S. economy dodged this unpleasant bullet, he noted.)

But research from Capital Economics suggested a dip below 49 has historically been just a rest stop on the road to 46 – where the real trouble starts.

"On past form, the level needs to be below 46 before a contraction in GDP growth is likely," wrote Capital Economics economist Amna Asaf. "Even then, the relationship needs to be treated cautiously because manufacturing is now a relatively minor part of the U.S. economy, accounting for only 10 per cent of GDP. The ISM index remained unusually weak during the second half of the 1990s, dragged down by a surging dollar and relatively weak global economic conditions, even dropping below the 50 mark a couple of times, yet GDP growth averaged more than 4 per cent during that period."

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Still, slumping PMIs are most certainly a flashing warning light for stock markets. Stocks have generally been quite sensitive to U.S. and (increasingly) Chinese PMIs in the past several years; but the rally in equities this year has become markedly out of tune with the economic realities as the year has progressed. In this light, the recent pullback in stocks could be just the tip of the iceberg.

David Parkinson is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights, and follow him on Twitter at @parkinsonglobe.

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