Growth continues to decelerate
SHORT-TERM TRENDA flat month, but downtrend persists
Global growth was almost flat during August, but the trend remained in the direction of slowing. Regions with flat growth included the G10, Asia, Central and Eastern Europe, the Middle East, and Africa. Growth slowed most noticeably in Latin America. In the U.S., ISM purchasing managers' indexes saw a bounce back in new orders after reaching the low point for the year in the previous month. ISM manufacturing inventories also moved higher. U.S. inflation was below expectations and below its peak as oil prices decreased. However, there was also less positive news, as U.S. home sales continued to drop sharply and the producer price index remained high. European growth remained in negative territory. Germany's business expectations showed continued weakness, and European manufacturing PMI remained in contraction territory. In August, Japan also slipped to contractionary levels. The PMI input price remained high, and PMI new business moved lower.
LONG-TERM CYCLEThis six-year illustration shows stable GDP up until the collapse from the coronavirus pandemic.
Feb '20–April '20The Covid-19 pandemic causes a global economic downturn.
May '20–Dec '21Global growth starts to surge and stays at elevated levels as life continues to normalize.
Jan '22–presentRising interest rates and inflation, and the fallout from the Russia-Ukraine War cuts global growth prospects.
Source: Putnam. Data as of August 31, 2022. We base our Global GDP Nowcast on a tailored methodology that captures daily data releases for the most essential growth characteristics for each of 25 countries — including purchasing managers' index data, industrial production, retail sales data, labor market metrics, real estate price indexes, sentiment indicators, and numerous other factors. The mix of factors used for each market may change over time as new indicators become available from data sources or if certain factors become more, or less, predictive of economic growth.
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