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Monday, December 10, 2012

Global economic data

The last time I looked at the global economy it was through the markets.  Lets take a peek through some economic data.

Lets start with the JPM global PMI.

We can see the usual 4rth quarter bump is happening again.  However, the manufacturing data is extremely weak this time.  Short of a miracle in the Dec. data we will start out the new year with global manufacturing in the weakest position since the last recession ended.

Here is a look at it compared to global GDP.

There is a pretty clear downward trajectory.  We will start out next year with the weakest global growth since the recovery.  I believe global growth below 2% is considered a global recession.  It looks like that may be the case now. 

Here are some comments from the report:

The uptick in global economic growth partly reflected improved
inflows of incoming new orders. November saw new business
increase for the fortieth successive month. Although the rate
of expansion was only modest, it was nonetheless the fastest
signalled since March this year.

Services providers saw a solid and accelerated increase in
new business during November. Manufacturing new orders fell
for the sixth straight month, but the decline was only marginal
and the joint-weakest during that period.

The improved growth in global output and new orders was not
reflected in the labour market, as staffing levels were
unchanged in November. This continued the broadly stagnant
trend in employment seen during the past half-year. Payroll
numbers were reduced slightly in manufacturing, but stabilised
in the services economy.

Manufacturing new orders fell for the sixth straight month.  I guess all those new IPhones, IPads, and IMacs weren't enough to fix the global new orders problems.  It has helped China though it may short lived once production of all the new products flattens out.

Lets turn to Europe and see what is happening there.

The PMI remains mired well below 50.  There seems to be a rather large gap between the current PMI readings and the GDP.  I suspect the GDP will be revised lower some time in the future.  I guess we will see
whether the PMI picks up or the GDP falls off.

France and Germany are very important economies to both Europe and the world.  How are they doing?

France's PMI has imploded and Germany's has been weak for months.  I thought this was interesting on Germany.

Germany's central bank, the Bundesbank, has cut its growth forecast for next year, saying the country's economy might be entering a recession.

Growth in 2013 is now expected to be just 0.4%, compared with a forecast in June of 1.6%, but is expected to bounce back to 1.9% in 2014.


There are a few things we know about central banks.  Their growth forecasts are always high and they never hint at a recession unless they know they are already in one.  I would say the above quote means the odds of Germany being in a recession right now are about 99.9%  I wonder how the German people are going to feel about all these bailouts Germany keeps getting asked to fund.  Just a thought.

The usual 4th quarter bump in the global economy is extremely weak this year.  If we have the usual 1st quarter drop in economic activity it could turn into an undeniable downturn everywhere.  That would have an impact on corporate earnings and may bring even more lowered estimates.


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.