This post is a guest contribution by Rebecca Wilder*, author of the of the News N Economics blog.

This week’s peek at the global economy shows some economic calm. The signs of hope remain mostly in the soft data – US and China purchasing managers surveys posting consecutive monthly growth – while the hard data – export growth, inflation, and unemployment – continue to deteriorate. Going forward, the story that “economies are declining less quickly” is gaining some momentum. And for some, a turning point may be on the horizon.

GS (green shoot): Trend in China’s purchasing manager survey probably saw a cyclical low


Source data courtesy of

The chart illustrates China’s manufacturing (MPMI) and non-manufacturing (NPMI) indices through April 2009. The manufacturing index marked its fifth consecutive month of growth, while the non-manufacturing index took its second consecutive bump. The two sectors continue to deteriorate – the MPMI and NMPMI indices remain below 50 – but at a slowing rate.

GS: Same story in the US


The chart illustrates the Institute for Supply Management’s monthly surveys of activity in manufacturing (ISM pmi) and services (ISM Services) through April. The story has gone global (see a nice post here at Global Economy Matters): production is still contracting, but at a falling rate.

In the US, the ISM pmi index dates back to 1948 and tracks well recession activity. As long as it doesn’t double dip, the ISM pmi is currently 40.1, then the economy and manufacturing will likely be expanding in coming months (values over 41.2 indicate overall economic expansion). I should stress that the uncertainty of the outcome in the auto sector makes double dipping a real possibility.

GS/Uh-oh: Export decline slows in South Korea, but quickens in India


The chart illustrates export and import growth through April for South Korea and through March for India. Trade flows took a quick U-turn, as imports (signal of domestic economic conditions) and exports (signal of foreign economic conditions) cam crashing down. On the bright side, South Korea’s export sector – export growth is highlighted in the chart: -33% and -19% over the year in India and South Korea, respectively – has tentatively stabilized since January 2009.

Uh-oh: the lagging indicator, unemployment, is surging across the board


The chart illustrates the annual change in the unemployment rate through March for Japan, Eurozone, and Germany, and through April for Australia (the current unemployment rates are listed in the legend). The evidence suggests rapid decline in labor conditions across the board. Germany is slow to get there (the harmonised measure), but the unemployment rate will rise further.

Uh-oh: another lagging indicator, prices, fall hard on energy


The chart illustrates the most recent inflation rate compared to the same rate just one year ago for Switzerland, Japan, Taiwan, South Korea, and Thailand. Prices are falling into the red for each economy except in South Korea, whose inflation rate slowed to its lowest level in 14 months.

These indicators are typical of a turning point. Some hard data (exports in Korea) show improvement, while others (prices and unemployment) are lagged to the economy and will continue to decline for some time.

Source: Rebecca Wilder, News N Economics, May 7, 2009.

* Rebecca Wilder is an economist in the financial industry. She was previously an assistant professor and holds a doctorate in economics.

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