The chart below shows my calculation of the year-on-year change in world industrial production, compared with my calculation of the aggregate PMI for the big 8 economies (USA, China, Euro zone, UK, India, Russia, Brazil, Japan). Both time series are extreme adjusted, to reduce/eliminate up or down 'spikes'. Since these are derived from very different surveys, the fact that they correlate so well indicates that they are a true picture of what's happening to the manufacturing side of the economy. I'll be updating my estimates for big 8 PMI in a day or two (S&P Global released the remaining data I need today)
The world economy remains sluggish, though when I was updating the 60-plus underlying time series used to calculate world industrial production, I did notice a few green shoots.
I'll be doing a piece on Trump's tariff plans and their impact on growth and inflation shortly. My preliminary take on them is that they will increase inflation while also reducing world growth overall. So any recovery predicated on falling interest rates (the global interest rate cycle has clearly peaked) will likely be reduced.
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| click on chart to enlarge |
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