Global retail sales rise 4.6% in 2017 as cyclical deviations widen; headline inflation at 3.8% in Q4
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G2H Macro Series

Feb 28

Global retail sales rise 4.6% in 2017 as cyclical deviations widen; headline inflation at 3.8% in Q4

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Global retail spending slowed down somewhat in December, falling 0.1% from its November level. As a result, retail volumes closed the year up 4.6% from 2016, exceeding the rate of growth implied by fundamentals (+4.4%). Transitory income shocks have now pushed private consumption 0.5% above its stable growth path, adding to inflationary pressures. Global CPI inflation accelerated in the fourth quarter, rising 3.8% SAAR. Considering PPI inflation is currently well above its steady-state level (4.1% versus 1.7%), we expect consumer prices…
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Feb 28

Manufacturing grew 4% in 2017, exceeding potential; strong inflationary pressures, PPI inflation up 4.1%

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Global manufacturing surged last December, rising 7.4% SAAR (+4.9%y-o-y) to close the year up 4.0%. The gap between actual and potential output widened by some 20 basis points to 1.5%, the largest cyclical deviation since mid-2008. As expected, PPI inflation weakened somewhat in December (+0.3%) held back by sluggish growth in raw material prices. Global producer prices rose 4.1% in 2017, fully recovering the losses from the two previous years. Given the delayed pass-through from producer to consumer prices, tight operating conditions…
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Feb 28

Industrial activity surges to strongest result since the Great Recession

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Global industrial production accelerated further in December, this time rising at an annualized rate of 7.7% (+4.1%year-over-year). Production was up 3.5% for the year as a whole, a significant improvement from the 1.8% increase recorded in 2016. Underlying the headline figure was a 4.0% increase in manufacturing activity, facilitated by a noticeable pick-up in private sector investment. In OECD countries, demand for fixed capital (structures, equipment) grew 3.5% last year, compared to 1.6% in2016. Unsurprisingly, output growth stemmed primarily from durable…
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Jan 25

Global industrial production is up 3.5% in November after 11 months; gap between factory and mining output widens

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Industrial activity continued to grow steadily in November, this time rising 4.9% annualized (3.5% year-on-year). The November result reflected strong demand for manufactured goods (+7.7% SAAR), which compensated for sluggish mining production in emerging markets. The divergence between factory and mining output is especially prevalent in Latin America, where extractive industries have underperformed the overall industrial sector for 19 consecutive months.  
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Jan 25

PPI inflation remained elevated in November as the manufacturing output gap hits a 68-month high

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Global manufacturing expanded 4.4% year-over-year in November, and at 3.9% after 11 months is on track to record its strongest year of growth since 2011. As was the case in previous months, steady growth in productive capacity (+3.2%) was amplified by increasingly favourable cyclical conditions. Production volumes have now outpaced potential output for 13 months, the longest period of above-trend growth in the post-recession period.  At 1.3% in November, the manufacturing output gap was at its highest level since March 2012. Tight operating…
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Oct 18

Is Global Inflation Finally Awakening?

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October Reports Uncover Rising Inflationary Pressures With the International Monetary Fund bumping up its forecast for global economic growth and the markets continuing to experience a ‘Goldilocks’ rally - synchronized expansion with limited inflation - global conditions call for cautious optimism. But what do the fundamentals for global production and manufacturing tell us about future price developments? Our Industrial Production report, which is the timeliest release for global production figures, supports the positive notions. Global industrial production grew 3.6% year-on-year in August in…
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Sep 18

Global industrial production up 3.6% in July, supported by strong factor output; production up 3.2% after 7M

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World industrial activity continues to trend upwards, growing 3.6% year-over-year in July. Industrial production is up 3.2% after seven months, well above the 1.6% rate of growth recorded in 2016. Underlying the improvement in industrial production is stronger demand for manufactured goods, which is also contributing to higher merchandise trade flows. World manufacturing production was up 3.5% through July, with sturdy rates of growth recorded in most large economies. Perhaps the one major exception is the United States, where the…
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