Part 2 : signs of recovering growth
Following sharp falls since the start of the US-China trade tensions, the global manufacturing PMI has been on an upward trend for five months. However, a soft US manufacturing ISM  reading in December shows that the uptrend is still not firmly established. Likewise, there has been no rebound in car sales as they continue to face difficult conditions in China.
Broadly speaking, growth in final demand remains buoyant both in the eurozone and the United States, driven by robust fundamentals. Dynamic labour markets, which have barely flinched at the manufacturing slowdown, are enabling sustained growth in disposable household incomes and consumption spending.
In the United States, the recovery in the residential sector is firming up. House builder confidence levels are nearing their highest in twenty years, confirming the positive signals coming from both housing starts and building permit numbers. The sector’s fundamentals remain positive, notably with extremely low vacancy rates .
In the eurozone, confidence surveys are gradually regaining ground, although the level of the composite PMI is consistent with growth of only 0.5–1.0%. Retail sales have not slumped, and vehicle registrations have returned to pre-WLTP levels.
China may be approaching cycle low. Following several measures to stimulate growth since the start of 2018, economic indicators are starting to improve, and confidence surveys are recovering. Receding trade war uncertainties should boost growth in the months ahead, although the impact of the coronavirus requires monitoring.
Elsewhere in emerging markets, growth is starting to stabilise following 18 months of slowdown. Targeted stimulus measures and the gradual dissipation of negative factors such as the global manufacturing slowdown and India’s growth slump leave hope for continued improvement.
 Manufacturing ISM: this index monitors changes in production levels from month to month.
 Vacancy rate: the number of private or business properties that are available in a particular area for sale or rent, usually expressed as a percentage of the total.
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The opinion expressed above is dated January 2020 and is liable to change. Latest available data is used.
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