The incoming data over this week have painted a more downbeat picture of the global economic outlook. Latest flash PMI surveys, for instance, revealed broadly-based evidence suggesting that global growth is moderating, and that the euro area in particular is possibly sliding back into recession (chart 1). That more downbeat view was further supported over the past few days by some weakness in other data releases for US consumer confidence (chart 2), for South Korea’s trade and from separate business surveys for Germany and the UK (chart 3). Despite these weaker signals, financial markets have largely taken this news in their stride, possibly due to growing confidence that central banks, and especially the Fed, will still manage to engineer a soft landing for the global economy. China's unexpected announcement of new stimulus measures this week has also provided some reassurance (chart 4). However, several cyclical and structural challenges remain. Service sector inflation, for example, has remained stubbornly high in most major economies in recent months (see chart 5). That was certainly a key factor behind the Reserve Bank of Australia's decision not to initiate an easing cycle this week, in vivid contrast to many of its global peers. Additionally, what constitutes a "normal" level for inflation and real interest rates remains highly debatable, especially in light of recent and prospective supply-side transformations (chart 6).
Global| Sep 26 2024
Charts of the Week: Almost Singing the Same Tune
by:Andrew Cates
|in:Economy in Brief
- USA| Sep 26 2024
U.S. Durable Goods Orders Hold Steady in August
- Aircraft orders decline after July strengthening. Orders less transportation rise modestly.
- Shipments ease following two months of strength.
- Unfilled orders fall moderately but inventories are little changed.
by:Tom Moeller
|in:Economy in Brief
- USA| Sep 26 2024
U.S. Pending Home Sales Rise Modestly in August
- Sales remain near cycle low.
- Home sales are mixed across four regions of the country.
by:Tom Moeller
|in:Economy in Brief
- USA| Sep 26 2024
Q2 2024 U.S. GDP Unrevised in Third Estimate
- GDP grew at a solid 3.0% q/q SAAR in the third estimate of Q2, unrevised from the second estimate.
- Q2 PCE, fixed investment revised slightly weaker.
- Bigger boost from inventories; bigger drag from trade in Q2.
- In the benchmark revisions back to 2019, GDP and PCE growth were notably stronger, especially in each of the past three years.
- Meaningful upward revisions to both corporate profits and personal income over the past several years.
by:Sandy Batten
|in:Economy in Brief
- USA| Sep 26 2024
U.S. Jobless Claims Eased Again in the September 21 Week
- Initial claims declined by 4,000 in the week ended September 21.
- Continued claims rose by 13,000 in the week ended September14.
- Insured unemployment rate still at 1.2%.
- Germany| Sep 26 2024
German Consumer Climate Remains Weak- A Slight Oct. Improvement Is Mooted
Since late-2022 the German GfK measure of consumer climate has improved but has been doing so very slowly and in fits and starts. Climate improved sharply from the end of 2022 until early to mid-2023 but the sharp rise did not go on for long. Afterwards some slight erosion took place. However, near the end of 2023, there was another step up as an improvement in German climate began. Since that point, confidence has remained steady in the region of about -21 or so (a weak level) in terms of the climate headline from GfK. More recently, economic expectations have logged some fresh erosion after having a similar path and moderate rebound.
Even so, the statistics on the GfK readings are clear. Climate is at the bottom 10% of all ranked historic readings. Economic expectations, income expectations, and the propensity to buy, are the three components that lag the GfK headline by a month. Their observations through September show economic expectations at a 37-percentile standing, the propensity to buy at a 30-percentile standing, and income expectations at a 44-percentile standing. Income expectations have clawed their way higher to stand near neutrality, as the median for ranked statistics -on any measure- occurs at a ranking at the 50th percentile mark. Income expectations are coming the closest to being back at neutral although they still fall short. The propensity to buy, at the 30% ranking mark, is still substantially short of neutrality, and the same is true of economic expectations with roughly a 37-percentile standing. But overall economic climate is in much worse shape than the components on the comparison of standings. The headline GfK reading is much weaker than any average of the ranking for its components. That is not unusual because historically the average component rank only explains about 60% of the variability in the ranking of climate.
GfK components The GfK components show improvement in train as of September for the propensity to buy measure and for income expectations while economic expectations are faltering and weakening. However, the GfK component improvements where they exist are only month-to-month. All three components are weaker compared to two months ago and two of three are net weaker compared to three months ago.
Elsewhere in Europe Other European confidence measures are up-to-date only through September, like the GfK components. Italy and France show solid month-to-month improvements in September confidence while the United Kingdom shows a sizeable drop in September. Over two months only France shows an improvement and over three months Italy is unchanged as France continues to show a gain and the U.K. shows a worsening. It would be hard to look at these data and find anything better than a possible spark of good news. In terms of the standing of confidence, Italy shows strong results apart from its recent trend changes with September marking an 80.5 percentile standing in its confidence measure. France has only a 43-percentile standing despite its recent gains. The U.K. is still nearly at its median level with a standing at its 49.2 percentile despite its recent sharp erosion.
- USA| Sep 25 2024
U.S. New Home Sales Ease in August
- Sales remain up sharply from 2022 low.
- Median sales price slips.
- Sales decline in most of country.
by:Tom Moeller
|in:Economy in Brief
- USA| Sep 25 2024
U.S. Mortgage Applications Strengthen Last Week
- Surge in refinancing continues to overshadow rise in purchase loans.
- Interest rates fall further.
- Average loan size jumps again for both purchase and refinanced loans.
by:Tom Moeller
|in:Economy in Brief
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