World: little sign of a slowdown beyond the manufacturing sector
As in 2015-16, global manufacturing is slowing sharply. The global manufacturing PMI has been falling for 18 months and is now at levels close to economic contraction. This negative signal has been underscored by the fact that global industrial output is falling. However, manufacturing weakness has so far not spilt over to the wider economy: the global services PMI index remains healthy and retail sales have recovered in recent months.
While the 2015-16 manufacturing downturn was directly related to the energy sector following a fall in oil prices, the auto sector appears to be the main factor this time around. Both registrations and production have turned down, especially in emerging markets and most notably in China. Trade war anxieties are also weighing heavily on manufacturing.
If all the threats were put into action, the resulting negative blow would edge the global economy closer to tipping point. However, there are currently no leading indicators of a global recession.
Glossary:
PMI indices: The Purchasing Managers’ Index (PMI) summarises confidence levels among business purchasing managers who are surveyed to establish if market conditions are expanding, staying the same or contracting.
See also : United-States| Economic outlook S2 2019
The opinion expressed above is dated September 2019 and is liable to change. Latest available data is used.
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