Global pulse stabilising? – Westpac

Richard Franulovich, Research Analyst at Westpac, suggests that a “synchronised global upswing” followed by its abrupt reversal have been key trading themes in H1 2018, but a quick scan of some high frequency indicators tentatively hint that the recent easing in global growth momentum may be coming to an end.

Key Quotes

“Manufacturing PMI breadth stabilised in May after hitting three year lows in April, helped along by firmer reads from the US, China, UK and Canada, along with selected pockets of recovery in emerging markets.”

“Against that, there is scant evidence of any recovery breadth in service sector PMIs. That said, geographic variation on the services side broadly matches that of the manufacturing sector; the US, China and UK posted gains in May, Japan is weaker whereas trends across the Eurozone and emerging markets are spotty and uneven.”

“More emphatically, our global data surprise and data pulse indices have posted strong gains in recent weeks (i.e. a greater share of the global data are both beating consensus expectations and firming versus prior outturns).”

“Sustainability and strength of any prospective pivot back toward ‘synchronised upswing” remains an open question. Eurozone financial conditions have tightened in recent weeks, even allowing for the recent depreciation in EUR and easing in peripheral sovereign spreads from recent highs. US financial conditions are tighter so far this year too, a higher USD and US yields accounting for the bulk of reduced market accommodation.”