April 8, 2019

Global Trade Expected To Slow To Lowest Level In Three Years


  • The World Trade Organization announced last week that it expects world trade will grow at 2.6 percent this year – the lowest level in three years – and three percent in 2020 due to tariffs and retaliatory tariffs and tighter monetary conditions as factors in its downbeat outlook.
  • The JP Morgan global purchasing managers index (PMI) was unchanged at 50.6 in March from the month prior. The bank said, “Growth of manufacturing production remained weak in March, as new order inflows stagnated and international trade flows declined. Output and new orders contracted in both the intermediate and investment goods industries. In contrast, growth of production and new business was sustained in the consumer goods sector, albeit at slower rates of expansion than during the prior survey month.”
  • The IHS Markit Eurozone reading fell to 47.5 in March from 49.3 due to the biggest decline in new orders since late 2012 and a drop in confidence that sent that reading to its lowest level in six years. The same reading for the United Kingdom rose to a 13-month high of 55.1 in March, up from a revised reading of 52.1 in February. The report said companies stepped up production to build-up inventories in advance of Brexit and also to meet rising inflows of new work. New business improved from both domestic and export markets, which had a positive impact on staff hiring, with jobs growth recorded following back-to-back reductions at the start of the year.
  • Manufacturing sector readings in Asia were mixed last month. Caixin’s reading for China rose to 50.8, up from 49.9 in February, to signal the first improvement in the health of China’s manufacturing sector for four months and the highest reading since July 2018. Manufacturing production in China rose for the second month in a row and the rate of increase was the quickest seen since last August. Nikkei’s PMI for Japan rose to 49.2 in March, slightly up from February’s 48.9, but had the worst quarterly performance since the second quarter of 2016. South Korea’s index rose to 48.8 in March from 47.2 in February even though production and new orders declined. The reading for ASEAN countries – Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam – rose from 49.6 in February to 50.3 in March due to an increase in new orders, but still was “relatively subdued.”
  • As a reminder all available PMI readings can be found here.