Well, almost. According to the latest PMI survey by Markit, the pace of global economic growth slowed to a 21-month low in April, and not merely due to an increased rate of contraction in Japan following the earthquake.
“Some signs also appeared that inflationary pressures may have begun to ease.“
Markit Economic Research
The JPMorgan Global PMI, compiled by Markit, indicated the weakest rate of growth of the global economy since the recovery began in August 2009. Although much of the deterioration could be linked to the Japanese earthquake, the pace of expansion also slowed outside of Japan.
The Global PMI, which measures private sector output growth across manufacturing and services, fell for a second successive month from February’s five-year high, down from 54.5 in March to 51.8 in April.
The steep deterioration in the rate of growth has largely reflected the disruptions to business caused by the Japanese earthquake of March 11.
However, even excluding Japan, the PMI surveys indicated the weakest growth for seven months in April, signalling a slowdown of approximately half of the magnitude that the index including Japan has registered since the quake struck. Reassuringly, despite the decline, the index excluding Japan is still consistent with global gross domestic product (GDP) rising at an annual rate of 2.5%–3.0% at the start of the second quarter, having signalled a rate of approximately 3.5% during the first quarter, including Japan, the quarterly GDP growth rate signaled in April was approximately 1,5% – 2,0%, the report says.
“Most notably, among the world’s major G4 (developed) and BRIC (emerging) economies, a steep cooling in the rate of growth in the US non-manufacturing sector has been reported in the past two months, and growth also cooled in the UK, China and Brazil in April. The weakness is not universal, however, with the Euro zone continuing to grow at a strong pace, buoyed by surging growth in France and Germany, while India continue to boom and Russia saw robust growth.“
New Orders Disappear
New business growth in the US slumped to the weakest since August 2009, and China has also reported only modest growth in recent months – most likely linked to ongoing efforts by the authorities to cool the overheating domestic economy.
“The weaker growth of new business is perhaps the greatest worry in respect to future output and employment growth, and suggests that the rate of global economic growth may have peaked in the first quarter. There are many uncertainties, however, notably the extent to which manufacturing supply chains outside of Japan may have been affected by the earthquake, and therefore hit production and order book growth. Against this, though, is the fact that rates of growth have slowed sharply in both manufacturing and services across the world in the past two months, and it is the service sector which has seen the strongest deceleration and which, in theory, should be little-affected by supply chain disruptions,“ chief economist Cris Williamson writes.
This has – of course – a severe impact on employment and job creations.
It doesn’t look good, at all…
Latest releases by Markit Financial Information:
- Worldwide price pressures ease to four-month low, but autos a notable exception
- ECB poised to hike rates in July while US and UK rates look set to stay on hold through 2011
- Japan’s economy contracts at increased rate in April
- China’s growth rate slips to 25-month low, but Taiwan sees pick-up
- UK surveys point to sharp growth slowdown
- Consumer spending in UK jumps in April but fundamentals have not improved
- Euro zone starts second quarter on solid footing
- Broad-based easing in EU growth and price pressures in April
Related by the Econotwist’s:
- Leading indicators – global growth peaking mid-year? (businessinsider.com)
- Europe Manufacturing Growth Accelerates More Than Estimated (businessweek.com)
- Japan’s Current-Account Surplus Shrinks After Earthquake (businessweek.com)
- Japan Apr Watchers’ Index Rebounds Slightly From 2-Year Low (forexlive.com)
- You: Sekisui banking on big home-building boom (search.japantimes.co.jp)
- Earthquake Weighs on Japan’s Current Account Surplus (online.wsj.com)