Economic Overview - June 2013

7/28/2019 Economic Overview - June 2013

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The Science of FinanceThe Science of Finance

Monthly economic overviewMonthly economic overview6 J une 2013: Global economy picks up speed in May, but Q2 as a wholestill looks weak


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Global growth strengthens, but goods production remains especially weak

Having hit a sixHaving hit a six--month low in April, global economic growth picked up again in May, according to PMI data. However, themonth low in April, global economic growth picked up again in May, according to PMI data. However, the

. . ,. . ,

annumannum above that seen late last year but well below perabove that seen late last year but well below per--crisis rates. Global manufacturing continued to more or lesscrisis rates. Global manufacturing continued to more or less

stagnate, while services saw faster, though still subdued, growth.stagnate, while services saw faster, though still subdued, growth.

Global PMI and economic growthGlobal PMI and economic growth Global goods and servicesGlobal goods and services

J PMorgan Global Composite PMI GDP annual % change PMI Output / Business Activity Index

5%

7%

60

65

55

60

65

1%50

45

50

-

-3%

-

40Global PMI Output Index

Global GDP 30

35

40

Global manufacturing

Global services

\ 2J an-00 J an-02 J an-04 J an-06 J an-08 J an-10 J an-12 J an-00 J an-02 J an-04 J an-06 J an-08 J an-10 J an-12


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North America drives manufacturing expansion

Looking at manufacturing, the strongest growth rates were seen in North America, with the PMIs for the US, Canada andLooking at manufacturing, the strongest growth rates were seen in North America, with the PMIs for the US, Canada and

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Czech Republic to see growth, though downturns eased in all euro countries. In Asia, robust growth in J apan contrastedCzech Republic to see growth, though downturns eased in all euro countries. In Asia, robust growth in J apan contrasted

with a renewed downturn in China and a particularly steep downturn in Taiwan.with a renewed downturn in China and a particularly steep downturn in Taiwan.

52

54

April May

anu ac urng

50

46

48

44Greece

Franc

e

Taiwa

n

Italy

Polan

d

Spain

Austria

Nethe

rla

Vietnam

China

Germ

an

India

CzechR

Russia

South

Af

Brazil

WOR

LD

SKor

ea

Turke

y

UK

Japan

Indon

esi

Mexic

o

Switzerla

US

Canada

\ 5

ds

p.

ica

nd


6/13

Record growth seen in J apan as Abenomics boosts manufacturing and services

Of the major economies, one of the biggest changes was seen in J apan, where the pace of expansion rose to the fastestOf the major economies, one of the biggest changes was seen in J apan, where the pace of expansion rose to the fastest

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manufacturing exporters bucked the wider trend of falling exports seen in the rest of Asia, enjoying the benefits of themanufacturing exporters bucked the wider trend of falling exports seen in the rest of Asia, enjoying the benefits of the

yens recent 20% depreciation, though much stronger growth in services suggests that the domestic economy is alsoyens recent 20% depreciation, though much stronger growth in services suggests that the domestic economy is also

..

J apanJ apan PMI and economic growthPMI and economic growth Asian exportsAsian exports

Manufacturing PMI New Export Orders IndexMarkit J apan Composite PMI GDP quarterly % change

502%

4%

55

60

65

40

-2%

0%

40

45

50

20

30

J apan

Asia (ex. J apan)

-

-4%

30

35

GDP

PMI

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J an-07 J an-09 J an-11 J an-13J an-06 J an-08 J an-10 J an-12


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UK economy sees growth strengthening in second quarter

The UK PMIs signalled the fastest growth for over a year in May; led by the service sector. However, manufacturing andThe UK PMIs signalled the fastest growth for over a year in May; led by the service sector. However, manufacturing and

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pick up from 0.3% in Q1 to 0.5% in Q2. The surprisingly strong upturn in the PMIs pushes the surveys out of the rangepick up from 0.3% in Q1 to 0.5% in Q2. The surprisingly strong upturn in the PMIs pushes the surveys out of the range

normally consistent with policy stimulus. The Bank of England held policy unchanged in response to the better data.normally consistent with policy stimulus. The Bank of England held policy unchanged in response to the better data.

UKUK PMI and economic growthPMI and economic growth Bank of England decisionsBank of England decisions

Markit/CIPS UK Composite PMI GDP quarterly % change Markit/CIPS UK All-Sector PMI BoE monthly policy change

1%

55

60

0

25

50

55

60

-1%

0%

45

50

-75

-50

-25

45

50

-3%

-2%

30

35 GDP

PMI

-150

-125

-100

30

35

40BoE monetary policy

PMI

Quantitative easing

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J an-06 J an-08 J an-10 J an-12 J an-00 J an-02 J an-04 J an-06 J an-08 J an-10 J an-12


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Eurozone set for further GDP fall in Q2, but rate of decline not worsening

The ECBs pledge to be ready to act if the economic data flow deteriorated seems redundant after PMI data showed theThe ECBs pledge to be ready to act if the economic data flow deteriorated seems redundant after PMI data showed the

..

seventh quarter running in Q2, with GDP down by a similar extent to the 0.2% fall seen in Q1, but the downturn is at leastseventh quarter running in Q2, with GDP down by a similar extent to the 0.2% fall seen in Q1, but the downturn is at least

not getting worse. Germany showed signs of stabilising and Spain saw an especially sharp easing in its rate of decline.not getting worse. Germany showed signs of stabilising and Spain saw an especially sharp easing in its rate of decline.

EurozoneEurozone PMI and economic growthPMI and economic growth Output by countryOutput by country

MarkitEurozone Com osite PMI GDP quarterly % change PMI Output Index (manufacturing and services)

0.5%

1.0%

.

55

60

55

60

-1.5%

-1.0%

-0.5%

.

35

40

45

40

45

50

-3.0%

-2.5%

-2.0%

20

25

30

GDP

PMI

25

30

35 Germany

Italy

Spain

France

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J an-06 J an-08 J an-10 J an-12 J an-09 J an-10 J an-11 J an-12 J an-13


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US GDP growth looks to have slowed in Q2, led by manufacturing slowdown

The allThe all--sector PMI for the US rose from Aprils tensector PMI for the US rose from Aprils ten--month low, but the upturn was limited to the nonmonth low, but the upturn was limited to the non--manufacturing sectormanufacturing sector

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weakest since last October. The data therefore suggest that US GDP growth will have slowed in Q2 compared to the 0.6%weakest since last October. The data therefore suggest that US GDP growth will have slowed in Q2 compared to the 0.6%

quarterquarter--onon--quarter expansion seen in Q1, but probably not enough to stop the Fed considering when to start easing backquarter expansion seen in Q1, but probably not enough to stop the Fed considering when to start easing back

..

USUS PMI and economic growthPMI and economic growth US manufacturingUS manufacturing

US Composite PMI GDP quarterly % change US PMI Output Index Manufacturing production, 3m/3m % change

1%60

65

0%

2%

55

60

-1%

0%

45

50

55

-4%

-2%

40

45

50

-3%

-2%

30

35

40

GDP

PMI

-8%

-6%

25

30

35

Markit PMI

Manufacturing output

\ 9

J an-06 J an-08 J an-10 J an-12 J an-07 J an-09 J an-11 J an-13


10/13

Chinese economic growth slips to seven-month low; forecasts revised down

While allWhile all--sector PMIs rose in J apan, the UK, the US and the eurozone in May, albeit with the latter merely indicating a slowersector PMIs rose in J apan, the UK, the US and the eurozone in May, albeit with the latter merely indicating a slower

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the current seventhe current seven--month growth spell, while services saw an ongoing sluggish expansion. The data added to gloomy viewsmonth growth spell, while services saw an ongoing sluggish expansion. The data added to gloomy views

from the IMF and OECD, who both revised down their 2013 growth forecasts for China to 7.75% and 7.8% respectively.from the IMF and OECD, who both revised down their 2013 growth forecasts for China to 7.75% and 7.8% respectively.

China PMI and economic growthChina PMI and economic growth Chinese output by sectorChinese output by sector

HSBC China Composite PMI GDP annual % change PMI Output / Business Activity Index

12%

14%

60

GDP

PMI

55

60

6%

8%

10%

50

55

45

50

0%

2%

4%

40

45

35

40ManufacturingServices

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J an-06 J an-08 J an-10 J an-12 J an-06 J an-08 J an-10 J an-12


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Economic Overview - June 2013

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