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7/30/2019 Economic Overview - May 2013
1/12
The Science of FinanceThe Science of Finance
Monthly economic overviewMonthly economic overviewMay 2013: Global economy sees subdued start to second quarte
7/30/2019 Economic Overview - May 2013
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Global economic growth slips to six-month low
Having held up well in Q1 to signal a rate of global GDP growth that was much improved on the threeHaving held up well in Q1 to signal a rate of global GDP growth that was much improved on the three--year low of 1.4%year low of 1.4%
,, -- ..
volumes have risen over the past two months, but manufacturing growth remains disappointingly weak andvolumes have risen over the past two months, but manufacturing growth remains disappointingly weak and easedeased in April.in April.
Meanwhile, subdued demand in many countries caused growth of service sector activity to slow to the weakest for tenMeanwhile, subdued demand in many countries caused growth of service sector activity to slow to the weakest for ten
..
Global PMI and economic growthGlobal PMI and economic growth Global tradeGlobal tradeGlobal PMI Manu. Ex orts Index Global Manufacturin Ex orts / %
60
65
5.0%
7.0%
57
62
20%
30%
50
55
1.0%
3.0%
47
52
0%
10%
40
45
-
-3.0%
-1.0%
Global PMI Output Index
Global GDP
37 -20%
-
PMI Exports Index
Global exports
\ 2'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13
.
'98 '00 '02 '04 '06 '08 '10 '12
-
7/30/2019 Economic Overview - May 2013
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Among the major developed countries, the US continued toAmong the major developed countries, the US continued to
US leads developed world economic expansion, while the eurozone floundersUS leads developed world economic expansion, while the eurozone flounders
PMI Output Index (manufacturing & services)
see the strongest pace of growth, despite the rate havingsee the strongest pace of growth, despite the rate having
slowed sharply compared with the start of the year.slowed sharply compared with the start of the year.60
Growth also eased in J apan, though remains in recoveryGrowth also eased in J apan, though remains in recovery
mode compared to the stagnation seen in the fourth quarter.mode compared to the stagnation seen in the fourth quarter.
50
Growth in the UK meanwhile improved to register theGrowth in the UK meanwhile improved to register the40
45
UKEurozone
strongest upturn s nce t e ympcsstrongest upturn s nce t e ympcs--re ate oost astre ate oost ast
August.August.30
35US
J apan
Developed world PMIsDeveloped world PMIs
In contrast, an ongoing deep recession continued to beIn contrast, an ongoing deep recession continued to be
recorded in the eurozone.recorded in the eurozone.
\ 3
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Measured across all emerging markets covered by the PMIs,Measured across all emerging markets covered by the PMIs,
Signs of stalling growth evident across the largest emerging marketsSigns of stalling growth evident across the largest emerging markets
65
PMI Output Index (manufacturing & services)
output rose at the slowest rate since September 2011,output rose at the slowest rate since September 2011,
registering the secondregistering the second--weakest performance seen in the lastweakest performance seen in the last
60
four years.four years.
Growth slowed to a sixGrowth slowed to a six--month low in China, while rates ofmonth low in China, while rates of
50
expansion were the weakest for a yearexpansion were the weakest for a year--andand--aa--half in Indiahalf in India
and Russia. Brazil was the only BRIC economy to registerand Russia. Brazil was the only BRIC economy to register40
45
China
India
faster growth in April, but even there the pace of expansionfaster growth in April, but even there the pace of expansion
remained weak.remained weak.30
35Russia
Emerging market PMIsEmerging market PMIs
Worryingly, stalling or weakened service sector growth pointsWorryingly, stalling or weakened service sector growth points
to a lack of growth of domestic demand in the worlds biggestto a lack of growth of domestic demand in the worlds biggest
\ 4emerging markets.emerging markets.
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S Korea tops manufacturing rankings, while France displaces Greece at bottom
South Korea pushed the US into second place at the head of the manufacturing PMIs league table in April. J apan wasSouth Korea pushed the US into second place at the head of the manufacturing PMIs league table in April. J apan was
, . ,, . ,
and Germany slid further down. In terms of manufacturing exports, the growth rankings were led by the UK for the firstand Germany slid further down. In terms of manufacturing exports, the growth rankings were led by the UK for the first
time in the global PMI series history, followed by South Korea and J apan.time in the global PMI series history, followed by South Korea and J apan.
55
March
April
Manufacturing PMI
50
45
40 Fra
Sp
Gre
Ital
Pol
Au
Irel
Ger
Net
De
Cz
UK
Ca
Swi
Chi
WO
So
Ru
Tai
Bra
Vie
Indi
Jap
Tur
Ind
Me
US
SK
\ 5
ce
in ece
nd
triand
many
herlands
mark
chRep.
ada
tzerland
a RLD
thAfrica
sia an
zil
nam
a an ey
nesia
ico
orea
7/30/2019 Economic Overview - May 2013
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No end in sight to Fed stimulus despite better-than-expected jobs data
US GDP grew at an annualised rate of 2.5% in Q1, up from 0.4% in Q4, but after allowing for inventories the pace slowedUS GDP grew at an annualised rate of 2.5% in Q1, up from 0.4% in Q4, but after allowing for inventories the pace slowed
. . . ,. . . , --
ISM data) hitting a tenISM data) hitting a ten--month low in April. Employment growth was meanwhile strongermonth low in April. Employment growth was meanwhile stronger--thanthan--expected, driving the joblessexpected, driving the jobless
rate down to its lowest since 2008. However, the rate of job creation is unlikely to encourage the Fed to start withdrawingrate down to its lowest since 2008. However, the rate of job creation is unlikely to encourage the Fed to start withdrawing
, ., .
USUS PMI and economic growthPMI and economic growth US nonUS non--farm payrolls and unemploymentfarm payrolls and unemployment
62
67
0.5
1.0
1.5
,
10
11
200
400
600
47
52-0.5
0.0
7
8
-200
0
37
42
-2.0
-1.5
- .
GDP
PMI
5
6
-800
-600
-
Monthly payrolls change
Unemployment
\ 6
32
2006 2007 2008 2009 2010 2011 2012 2013
-2.5 4
2008 2009 2010 2011 2012 2013
-1000
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J apans policymakers rewarded with growth upturn and rising price pressures
J apans PMIs showed growth easing from Marchs jointJ apans PMIs showed growth easing from Marchs joint--record high, but the pace of expansion remained consistent withrecord high, but the pace of expansion remained consistent with
..
and export gains from the weaker yen have helped revive growth. There were also promising signs in the fight againstand export gains from the weaker yen have helped revive growth. There were also promising signs in the fight against
deflation. Manufacturers input costs rose at the fastest rate for over a yeardeflation. Manufacturers input costs rose at the fastest rate for over a year--andand--aa--half, and service sector costs showedhalf, and service sector costs showed
..
J apanJ apan PMI and economic growthPMI and economic growth J apanese input pricesJ apanese input prices
52
57
1.0
2.0
3.0,
70
75
80
Manufacturing
Services
42
47
-2.0
-1.0
0.0
55
60
65
32
37
-5.0
-4.0
-3.0
GDP
PMI40
45
50
\ 7
27
2006 2007 2008 2009 2010 2011 2012 2013
-6.0 35
2008 2009 2010 2011 2012 2013
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Euro area recession continues, with renewed downturn in Germany
The Eurozone PMI rose slightly in April, but the surveys continued to indicate a strong pace of economic contraction.The Eurozone PMI rose slightly in April, but the surveys continued to indicate a strong pace of economic contraction.
, ,, ,
downturn in Germany, where output fell for the first time since last November. The ECB reacted to the ongoing recessiondownturn in Germany, where output fell for the first time since last November. The ECB reacted to the ongoing recession
by trimming its main policy rate to an allby trimming its main policy rate to an all--time low of 0.5%, though few expect the cut to have a material impact.time low of 0.5%, though few expect the cut to have a material impact.
EurozoneEurozone PMI and economic growthPMI and economic growth Output by countryOutput by country
60
65
1.0
2.0
,
60
65
45
50
55
-
0.0
45
50
55
35
40
-2.0
.
GDP
PMI
35
40Germany
France
Italy
S ain
\ 8
30
2006 2007 2008 2009 2010 2011 2012 2013
-3.0 30
2009 2010 2011 2012 2013
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UK economy starts Q2 on good footing, after better-than-expected growth in Q1
The April PMIs signalled the fastest rate of expansion in the UK since the OlympicsThe April PMIs signalled the fastest rate of expansion in the UK since the Olympics--related growth spurt seen last August.related growth spurt seen last August.
,,
further in services. The improved survey data point to a good start to Q2 and, coming on the back of a betterfurther in services. The improved survey data point to a good start to Q2 and, coming on the back of a better--thanthan--
expected 0.3% increase in GDP in Q1 and above target inflation, meant the Bank of England saw no need for moreexpected 0.3% increase in GDP in Q1 and above target inflation, meant the Bank of England saw no need for more
..
UKUK PMI and economic growthPMI and economic growth UK manufacturing exportsUK manufacturing exportsCom osite PMI GDP % UK PMI Manufacturin Ex orts Index 3m/3m % ch ex orts ONS
57
62
0.5
1.0
1.5
60
65
8
12
47
52
-0.5
0.050
55
0
4
37
42
-2.0
-1.5
- .
GDP
PMI40
45
-8
-4
UK goods exports
PMI New Export Orders
\ 9
32
2006 2007 2008 2009 2010 2011 2012 2013
-2.5 35
2007 2008 2009 2010 2011 2012 2013
-12
7/30/2019 Economic Overview - May 2013
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Equities surge to new highs on central bank largesse
Global equities hit a postGlobal equities hit a post--crisis high again in early May, with the S&P 500 reaching an allcrisis high again in early May, with the S&P 500 reaching an all--time record. Earnings have nottime record. Earnings have not
, . ,, . ,
index some 25% above its average over the past 12 months, equity price momentum and the PMI are moving in oppositeindex some 25% above its average over the past 12 months, equity price momentum and the PMI are moving in opposite
directions suggesting either improved equity sentiment will soon feed through to the real economy, or that stimulus is notdirections suggesting either improved equity sentiment will soon feed through to the real economy, or that stimulus is not
..
WorldwideWorldwide equity pricesequity prices % change since:pre-crisis
peak
end of
2012
last
monthFTSE All World Index diver ence from 12 month ave. Global PMI
FTSE All World -11.2 10.7 5.5
Dow Jones Industrial Ave. 6.6 15.3 3.4
S&P 500 4.3 14.5 4.520
40
60
60
65
FTSE 100 -2.2 11.6 4.9
Eurofirst 80 -37.2 5.9 6.9
-
-20
0
50
55
. . .
CAC 40 -35.9 8.7 7.9
Shanghai Composite -63.1 -1.0 1.6-80
-60
-
40
45
Global share price momentum
\ 10
Nikkei 225 -21.8 37.4 8.3-100
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13
35
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minesmines datadata
surfacessurfaces informationinformation
buildsbuilds platformsplatforms
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