25 Mar 2015
Global activity remained weak in Q1, might pick up later this year – Capital Economics
FXStreet (Barcelona) - Michael Pearce of Capital Economics, shares that their global manufacturing PMI eased to 52 from previous 52.2 suggesting that the pace of global growth in Q1 was little changed from the end of last year.
Key Quotes
“Our flash global manufacturing PMI, which is a weighted average of the preliminary PMIs for the world’s four largest economies, edged down from 52.2 in February to 52.0 in March. This left the average for Q1 as a whole at a similar level to that in Q4 and consistent on past form with world GDP growth of 3 to 3½% annualised.”
“The fall in March was largely due to a sharp drop in China’s Markit manufacturing PMI. Alongside the weak activity data for January and February published recently, this suggests that China’s economy has slowed markedly since the start of the year. While policymakers are comfortable with growth slowing gradually, we think the PBOC will intervene if the present sharp slowdown persists.”
“Meanwhile, Japan’s manufacturing PMI also slumped, for the second month running, adding to signs that the limited recovery in Q4 has already fizzled out.”
“By contrast, the US Markit manufacturing PMI rose in March, supporting our view that the recent run of poor economic data has been mostly due to weather-related disruption.”
“The other bright spot was the euro-zone, where both the manufacturing PMI and the broader flash composite PMI rose for a fourth consecutive month. The latter points to growth of between 0.3-0.4% in the first quarter, a similar pace to Q4’s 0.3% expansion.”
“Although global activity remained weak in Q1, we still expect it to pick up later this year. The boost to the global economy from the collapse in oil prices has yet to be fully felt, while a number of central banks are set to loosen policy further.”
Key Quotes
“Our flash global manufacturing PMI, which is a weighted average of the preliminary PMIs for the world’s four largest economies, edged down from 52.2 in February to 52.0 in March. This left the average for Q1 as a whole at a similar level to that in Q4 and consistent on past form with world GDP growth of 3 to 3½% annualised.”
“The fall in March was largely due to a sharp drop in China’s Markit manufacturing PMI. Alongside the weak activity data for January and February published recently, this suggests that China’s economy has slowed markedly since the start of the year. While policymakers are comfortable with growth slowing gradually, we think the PBOC will intervene if the present sharp slowdown persists.”
“Meanwhile, Japan’s manufacturing PMI also slumped, for the second month running, adding to signs that the limited recovery in Q4 has already fizzled out.”
“By contrast, the US Markit manufacturing PMI rose in March, supporting our view that the recent run of poor economic data has been mostly due to weather-related disruption.”
“The other bright spot was the euro-zone, where both the manufacturing PMI and the broader flash composite PMI rose for a fourth consecutive month. The latter points to growth of between 0.3-0.4% in the first quarter, a similar pace to Q4’s 0.3% expansion.”
“Although global activity remained weak in Q1, we still expect it to pick up later this year. The boost to the global economy from the collapse in oil prices has yet to be fully felt, while a number of central banks are set to loosen policy further.”