Markit economic overview

Transcription

1 Markit Economics Markit economic overview Global growth held back by emerging market stagnation August

2 Developed world leads global growth higher for first time in four months Global economic growth picked up slightly for the first time in four months in July, according to Markit s worldwide PMI survey data. The JPMorgan Global PMI rose from 53.1 in June to 53.4 in July, to signal a rate of global GDP growth of just over 2% per annum. A marked divergence was once again evident however, with robust expansion in the developed world contrasting with stagnation in the emerging markets.. Global PMI and economic growth Developed v emerging markets Sources: Markit, JPMorgan \ 2

3 Developed world growth edges higher Developed world growth continued to be led by the UK, and the US where a rate hike later this year looks a strong possibility. However, resilient growth in the eurozone and signs of improving demand in Japan also provided positive news for policymakers. The PMI for the developed world edged higher to 54.4, up from 54.2 in June, though that s broadly consistent with just 1.5% annual GDP growth. Developed world economic growth Four largest developed economies Sources: Markit, Nikkei, CIPS \ 3

4 Emerging market weakness led by China stagnation and Brazil s collapse At 50.1, the Markit Emerging Market PMI remained close to the recent low of 49.6 seen in June, suggesting emerging market GDP grew at a meagre annual rate of around 4%. With the exception of the crisis, emerging markets have not seen such weak growth since A deepening downturn in Brazil was accompanied by near-stagnation in China. Better news came from modest upturns in Russia and India. Emerging market economic growth Four largest emerging markets Sources: Markit, Caixin, Nikkei \ 4

5 Eurozone periphery plays catch-up as core struggles for momentum The eurozone showed resilience in the face of Greece s crisis. The region s PMI held close to June s four-year high, despite the Greek PMI showing a record downturn as bank closures hit the economy. The region as a whole looks to be on course for GDP to have risen 0.4% in Q2, sustaining this pace at the start of Q3. Spain and Ireland are the star performers, with France back close to stagnation and Germany growing only modestly. Eurozone GDP and the PMI Greece GDP and the PMI Sources: Markit, Eurostat, National Statistical Service of Greece \ 5

6 US rate hike expectations rise amid improving economy and robust job gains The odds narrowed for a hike in US interest rates as the data continued to show robust economic growth and a recovering labour market. GDP data showed a 2.3% annualised upswing in Q2, which Markit s PMI suggest persisted into Q3. Non-farm payrolls also rose 215,000 in July. But higher rates are not guaranteed, as pay growth remained a tepid 2.1%, and the strong dollar and low oil prices will keep inflation down. US economic growth (GDP v PMI)* US labour market * pre-crisis PMI uses manufacturing data only. Sources: Markit, U.S. Bureau of Economic Analysis, Bureau of Labour Statistics \ 6

7 Bank of England dampens rate rise outlook The UK economy grew 0.7% in Q2, in line with the PMI, which also points to a robust 0.6% pace of expansion at the start of Q3. Wage growth also picked up, rising to 2.8% (excluding bonuses), and 3.3% in the private sector its highest since The Bank of England revised down its inflation outlook, however, dampening expectations of a rate hike in 2015, citing the strong pound, low oil prices and spare capacity. UK economic growth (GDP v PMI)* UK pay growth Sources: Markit, ONS, Ecowin \ 7

8 China slowdown spreads across Asia, though Japan sees sustained growth The Nikkei PMI showed sustained growth in Japan, with the weak yen boosting exports and services continue to expand. The data will add to the Bank of Japan s view that the economy is enjoying modest growth, though the lack of price pressures remains a concern. The Caixin PMI meanwhile showed growth hitting a 14-month low in China, with weakness spreading to other countries such as Hong Kong and Taiwan. Japan economic growth (GDP v PMI) China economic growth (GDP v PMI) Sources: Markit, Nikkei, Caixin, NBS, Cabinet Office Japan \ 8

9 Greece and Taiwan see steepest factory downturns, Czech Republic heads table Global manufacturing remained stuck firmly in the slow lane at the start of the third quarter, hindered by slumping demand in many key emerging markets. The JPMorgan Global Manufacturing PMI, compiled by Markit, was unchanged at 51.0 in July, pointing to one of the weakest growth spells seen over the past two years. With the exception of Greece, where bank closures and uncertainty surrounding the debt crisis led to the largest downturn seen in the survey s 16-year history, and France, manufacturing downturns were limited to emerging markets, led by Taiwan. Eastern European and eurozone countries dominated the top of the rankings, led by the Czech Republic, followed by Ireland, the Netherlands and Italy, highlighting the resurgent growth evident in pockets of the euro area. Sources: Markit, CIPS, NEVI, Nikkei, BME, Bank Austria, Investec, RBC, AERCE, ADACI, Caixin, HPI \ 9

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