Momentum is easing along the world’s major economies, as outlined by a gauge the OECD uses to calculate turning points.
The Composite Leading Indicator would be the latest sign of a synchronized slowdown in global growth, contributing to recession warnings sparked by industrial figures in Germany yesterday and and slumping trade figures for China earlier on Monday.
The indicator, that is certainly meant to anticipate turning points six-to-nine months ahead, has been ticking down since the begin 2018 and fell again in November. The OECD singled out the U.S. and Germany, where it said “tentative signs” of easing momentum have become confirmed.
Just two weeks into 2019, the OECD economic indicator follows a run of numbers this mean growth this year may be even slower than currently anticipated. For Bloomberg Economics, the information point to “slowdown, not meltdown,” however it still says the losing of momentum is “striking.”
What our economists say:
“The early signs through the data suggest the globe economy lost momentum mainly because it entered 2019.” The median at a mapping of world measures “suggests gains sometimes have dropped beneath the 3% mark in my ballet shoes since late 2016. That’s about 0.7 percentage point beneath the average since 2010 in addition to a full percentage point below the 2000–2007 average. That slowdown is striking.”
Trade-tensions with the US are showing up in data. Chinese exports slumped 4.4% in December from the year earlier, marking the worst performance in dollar terms since 2016. Imports also dropped the most since 2016, hinting at softening demand from home which may have implications for exporters to China.
The numbers sent stocks short of Europe and Asia. The Stoxx 600 Index was down almost 1% as of 12 pm Frankfurt time.
Euro area
Industry while in the region’s major economies a grim month in November. Output declined 1.7%, which includes a slump in Germany sparking talk it can shrink to get a second quarter, putting it in a very technical recession. In addition there are concerns about Italy’s economy, while riots and protests in France have hit growth there.
US
Jobs growth remains strong, in line with the latest payrolls report, but measures of activity have weakened. The Institute for Supply Management’s key manufacturing gauge is in a two-year low, and the housing marketplace is cooling. Overall expansion is forecast to moderate this coming year, partly due to a fading boost from the Trump administration’s tax cuts.
Federal Reserve policy makers took note from the changed outlook and suggested they are able to pause their interest-rate hike cycle while they await clarity. Chairman Jerome Powell said a couple weeks ago that this Fed is usually “patient and versatile and wait and then determine precisely what does evolve.”
? 2019 Bloomberg L.P
