Friday, May 15, 2009
This week, the hard economic data reminds us that the global recession is ongoing: exports remain deep in the red; retail sales disappoint; inflation volatile on food and energy but still down over the year; and industrial production declines. However, the data are consistent with the story of a slowing economic decline, foretold by several the "green shoot" survey reports (see last week's World Economic Reports).
Industrial Production: Still heading down, but at a slower rate
The chart illustrates the industrial production index for Germany and the UK (seasonally adjusted), and the growth rate for Malaysia and India (to adjust for seasonal variations) through March 2009. The rate of decline is slowing in Germany - actually, Germany's index went unchanged over the month - and the UK, improving over the year in Malaysia, but still heading down in India. A stabilization in the industrial sector may be afoot: the cliff diving is likely complete.
Exports: Same as industrial production...stabilization?
The chart illustrates annual export growth through March for Canada, Germany, Malaysia, and the US, and through April for China. Although China, Malaysia, and Canada turned down on an annual basis, the precipitous decline seems to have passed. We look for a trend to show stabilization.
Retail Sales: Struggling
The chart illustrates annual retail sales growth through April for China and the US, and through March for Singapore. Retail sales are struggling to make way. We wait to see if the various stimulus packages will get consumers back to the stores and auto dealerships; but let's not hold our breath quite yet.
Inflation: Energy and food prices create some volatility
The chart illustrates annual inflation through April 2009. Clearly, the momentum is down on a sharp drawback in aggregate demand. However, the recent bump in energy and food is creating some volatility (some upward momentum against the downward pressure). Norway is experiencing stronger-than-expected inflation, as the economy fairs better than others; but don't worry, inflation will probably fall, too.
The headline of the day: Eurozone economy took a dive in Q1
The chart compares Eurozone GDP to US GDP: ironic that the US is the epicenter of the global economic crisis,; was able to pass on the pain simply through trade flows; and now foreign economies take a sharper U-turn.
Overall, the global economic decline appears to be slowing; however, the recovery is still tentative.