The latest CPB report showed global trade volumes soaring to a record high in May, so much so that second quarter growth is now tracking around 2% annualized. That said, we’re not celebrating just yet because the report doesn’t change the overall global economic picture which, incidentally, remains quite dull. We already know from June’s sub-50 global manufacturing PMI that economic activity deteriorated significantly after May.
Moreover, as today’s Hot Charts show, the improvement in trade in May failed to spur industrial production, with the latter likely heading for its first quarterly contraction since 2009. May’s IP data showed continuing weakness in some parts of the world, as well as new concerns. With two months of data in Q2, IP is tracking negative for the third quarter in a row in the eurozone, and for the fourth consecutive quarter in Latin America. But for the first time since 2009, emerging markets as a whole are now contracting on a quarterly basis, largely due to Asia’s IP decline (the first since 2008). Increased global risk aversion may be prompting producers to ship goods out of inventories rather than expand output. That’s a negative for global growth in Q2, although it could be a positive for subsequent quarters if demand holds up.
Moreover, as today’s Hot Charts show, the improvement in trade in May failed to spur industrial production, with the latter likely heading for its first quarterly contraction since 2009. May’s IP data showed continuing weakness in some parts of the world, as well as new concerns. With two months of data in Q2, IP is tracking negative for the third quarter in a row in the eurozone, and for the fourth consecutive quarter in Latin America. But for the first time since 2009, emerging markets as a whole are now contracting on a quarterly basis, largely due to Asia’s IP decline (the first since 2008). Increased global risk aversion may be prompting producers to ship goods out of inventories rather than expand output. That’s a negative for global growth in Q2, although it could be a positive for subsequent quarters if demand holds up.
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