Global Leading Indicators Continue To Be Strong‏

Summary and outlook
Global leading indicators continue to be strong, pointing to an ongoing recovery in the world economy.

In the US ISM remains resilient with strong details, although the headline index declined slightly. PMIs in the euro area are getting stronger, reflecting increasing activity also in the periphery countries. China is losing a bit of momentum.

We expect the global recovery to stay close to trend growth in Q4 but move up a gear during 2014.

Details
Global PMI new orders remain high although there was a slight decrease to 54.7 in December from 54.8 in November. The index points to continued growth close to trend for the global economy.

In the US ISM declined slightly to 57.0 in December from 57.3 but it remains resilient as the details were quite strong. The new orders index increased and the inventory index decreased leading to an increase in the order-inventory balance. The gap between ISM and industrial production has been reduced as industrial production has picked up.

In the euro area the final PMI composite increased a bit to 52.1 in December after having fallen for two consecutive months. It points to growth around 0.5-1.0% q/q AR. ZEW and IFO both increased further, reflecting higher activity. In addition, Italian and Spanish manufacturing PMIs are getting stronger, reflecting that the economies in the periphery countries are improving. Low M1 and credit growth should help to keep ECB on an easing bias. UK PMI manufacturing new orders declined but are still high. Scandi data came out weaker.

Manufacturing PMIs in Asia are still above 50. HSBC manufacturing PMI declined to 50.5 in December and the Chinese economy appears to be losing a bit of momentum again. In Japan data are still very robust despite PMI declining slightly. The Japanese Tankan survey is still rising. PMIs in the CEE declined.

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