A glimmer of dawn or just a lighter shade of dark? The most recent economic indicators have not been shining like the sun, but they have certainly not been discouraging – a welcome change from months of economic gloom.
Markit’s JPMorgan global purchasing managers output index is a good overall measure of economic strength. The index of current conditions reached its 2010 peak of 57.7 in April, a reading which corresponds with 4 per cent growth in global gross domestic product. The index then slipped steadily to 52.6 in September. If the past record holds, that put the world on an uncomfortably low 2 per cent trajectory, with developing economies growing faster and rich ones hardly growing at all.
But the October reading is likely to be better. Many recent indicators have been encouraging: both manufacturing and service PMIs from China (where the weakness was never that great), the US, much of the eurozone and the UK. Only Japan seems to be mired in weakness. There has even been mildly good news from the US labour market, one of the world’s bigger economic weak-spots.