Summary and Outlook
• Global indicators confirm the re-acceleration in global growth after a weak start to the year. In the US, strong ISM figures as well as the further improved OECD leading indicator give reason for optimism about months to come. China seems to have bottomed out and indicators suggest a moderate recovery. The eurozone indicators are more mixed.
• We look for global growth to strengthen in Q2 following a low point in Q1. Going into H2, we expect annualized global growth to be 4%-plus driven by 3% growth in the US, 2% growth in the Euro area and 8% growth in China. The Euro area manufacturing is currently in a soft patch but should recover after the summer on the back of stronger exports.
Details
• In the US, a further increase in the OECD leading indicator suggests a re-acceleration after a weak start to the year. Also, the ISM indicators supports a quite optimistic US outlook both in the manufacturing and the service sector, with improved details and upbeat comments.
• In the Euro area the indicators are a bit more mixed. The OECD leading indicator points to a moderation in the recovery. Euro area PMIs came out mixed with weak manufacturing figures reflecting a lagged effect from the slowdown in global growth in Q1, where China and US showed some weakness. The service PMI on the other hand, is mainly driven by domestic demand and continued its improvement, increasing to the highest level since June 2011. The OECD leading indicator and PMIs for the UK suggest stabilizing and robust growth.
• In China, growth has bottomed and seems to be moving from fragile stabilization to a moderate recovery. The Markit/HSBC manufacturing PMI as well as industrial production continue to accelerate. Strong details suggest further improvements in the future. Recovering growth is also supported by the OECD leading indicator. In Japan, activity is still suffering from the April VAT hike but the PMI new orders showed slight improvements in May.
To Read the Entire Report Please Click on the pdf File Below