Global industrial output contracting ex. China

14-5-2019

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The forecast here at the start of the year was that global economic momentum – as measured by the six-month rate of change of industrial output in the G7 economies and seven large emerging economies – would continue to weaken through around July 2019. How is this forecast playing out?

Six-month output growth fell to a 33-month low in February but recovered in March – see first chart.

 

This recovery, however, reflected a surge in Chinese output, partly in compensation for weak activity in January / February but apparently also influenced by stockpiling of inputs ahead of April’s VAT cut – second chart.


Ex. China, global industrial output contracted in the six months to March: G7 output stagnated while production in the rest of the E7 fell at its fastest pace since 2015.

A Chinese April number is due this week and is likely to show a sharp reversal. Year-on-year growth of exports also spiked higher in March but slumped back close to January / February levels last month – third chart.


Assuming a Chinese relapse, G7 plus E7 six-month output growth should resume its fall, moving below the February low. The global manufacturing PMI is consistent with further weakness – fourth chart. The expectation here is that the six-month output change will bottom in negative territory and probably below the 2015 trough.


Dit zijn de visies van de auteur op het moment van publicatie en die kunnen afwijken van de visies van andere personen of teams bij Janus Henderson Investors. De genoemde effecten, fondsen, sectoren en indices in dit artikel vormen geen (deel van een) aanbod of verzoek om die effecten te kopen of te verkopen.

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