Transcript Here - Sovereign Wealth Focus

Global economic recovery:
From a surging start to a softer patch?
14 June 2011
Rob Dobson
Agenda: Sovereign Wealth Forum
 Introduction to the PMIs
 Global economic recovery: Softening in Q2
 Deja vu and current levels of recuperation
2
Introduction to PMIs
 Business surveys of over 18,000 companies worldwide each month
 Provide timely and accurate economic indicators
 Fill gaps in official data
– Official data are often only available weeks, months or years after the PMIs
– Official data are subject to significant revision
 PMIs can be broken down to provide an accurate representation of global and
national trends
3
Sharp global growth slowdown signalled in Q2
Global GDP and the PMI
Manufacturing and services
GDP annual % change
PMI
65.0
6%
PMI
65.0
Global Manufacturing Output
5%
60.0
3%
55.0
2%
50.0
1%
Global Services Business Activity
55.0
50.0
45.0
0%
45.0
-1%
40.0
-2%
Global PMI Composite Output
35.0
60.0
4%
40.0
35.0
-3%
Global GDP
30.0
-4%
30.0
2000
4
-5%
2002
2004
2006
2008
2010
Sources: Markit, ISM, JPMorgan, Ecowin.
25.0
2007
2008
2009
2010
2011
Developed market growth slips closer to stagnation
Developed Markets
Emerging Markets
GDP annual % change
PMI
62.0
GDP annual % change
PMI
60.0
10%
4%
8%
58.0
2%
55.0
54.0
6%
0%
50.0
4%
46.0
42.0
38.0
34.0
2000
5
50.0
-2%
45.0
Developed Market PMI Output
-4%
Developed Market GDP
-6%
2002
2004
2006
2008
2010
Sources: Markit, ISM, JPMorgan, HSBC, Ecowin.
Emerging Market PMI Output
2%
Emerging Market GDP
40.0
2000
0%
2002
2004
2006
2008
2010
Developed markets slowing – EZ recovery remains uneven
G4 Developed Markets
EZ recovery remains ‘lop-sided’
PMI Output Index
(Manufacturing & Services)
PMI Output Index
(Manufacturing & Services)
65.0
70.0
United States
Eurozone
Japan
United Kingdom
60.0
60.0
55.0
50.0
45.0
50.0
40.0
35.0
40.0
Germany
France
Italy
Spain
Ireland
Greece (manu. only)
30.0
25.0
30.0
2007
6
2008
2009
Sources: Markit, ISM.
2010
2011
20.0
2007
2008
2009
2010
2011
UK and US PMIs retreat from ‘rate-hike’ territory
UK
Eurozone
PMI, all sector
60
Rate change (%)
50
25
55
PMI, all sector
65
US
Rate change (%)
75
50
50
60
25
25
60
0
55
0
-25
-50
45
50
-25
-75
35
-150
'98
'01
'04
'07
Eurozone PMI
-100
-125
'10
50
-50
-50
45
UK PMI
BoE base rate
40
7
Rate change (%)
75
50
0
-25
PMI, all sector
70
-75
ECB base rate
40
-100
35
-125
'98
'01
'04
'07
'10
-75
40
-100
US PMI
Fed Target Rate
30
'98 '01 '04 '07
Sources: Markit, ISM, Bank of England, European Central Bank, US Federal Reserve Bank.
-125
-150
'10
China cools as government acts to rein in growth
BRIC
Emerging Europe & Middle East
PMI Output Index
(Manufacturing & Services)
70.0
PMI Output Index
80.0
Poland Manufacturing
Czech Manufacturing
70.0
Turkey Manufacturing
Saudi Arabia + UAE (whole economy)
60.0
60.0
50.0
50.0
Brazil
40.0
Russia
40.0
India
China
30.0
2007
8
2008
2009
2010
Sources: Markit, HSBC, SABB HSBC.
30.0
2011
20.0
2007
2008
2009
2010
2011
Fears of jobless economic recovery rise
Global PMI – orders and jobs
PMI New Orders Index
US employment
PMI Employment Index
65
58
60
55
ISM Employment Index
61
Non-farm payroll change, '000
500
58
300
55
52
55
49
50
49
-100
46
46
45
43
40
40
New business
35
Employment
30
'99
9
100
52
'01
'03
'05
'07
'09
43
40
37
34
37
31
34
28
2002
'11
Sources: Markit,JPMorgan, ISM, Bureau of Labor Statistics.
-300
ISM Composite
Employment Index
-500
Non-farm payroll
change ('000)
-700
-900
2004
2006
2008
2010
Price pressures and supply chain disruptions ease
Global PMI – prices
PMI Input Prices Index
85
Commodity markets
PMI Delivery Times Index*
37
Oil (US$/barrel)
150
Copper ($/tonne)
11000
-11.2%
WTI
Copper
41
9000
120
-11.6%
65
7000
45
90
5000
49
45
60
3000
53
Global Manufacturing PMI Prices
Global Manufacturing PMI delivery times
25
1998 2000 2002 2004 2006 2008 2010
10
Data updated at close 3 June 2011.
57
30
2008
1000
2009
Sources: Ecowin, Markit, JPMorgan. *inverted
2010
2011
Looking familiar?
PMI
QE2 announced
65.0
Recovery begins
60.0
55.0
50.0
45.0
40.0
35.0
Global Manufacturing Output
Global Services Business Activity
30.0
25.0
2004
11
2005
Sources: Markit, JPMorgan.
2006
2007
2008
2009
2010
2011
Recuperated or still in recovery
12
Source: Ecowin.
Disclaimer
Any information provided in this presentation is on an “as is” basis. Markit (including any of its affiliates)
makes no warranty, expressed or implied, as to its accuracy, completeness or timeliness, or as to the
results to be obtained by recipients, and shall not in any way be liable to any recipient for any inaccuracies,
errors or omissions. Without limiting the foregoing, Markit shall have no liability whatsoever to any recipient,
whether in contract, in tort (including negligence), under warranty, under statute or otherwise, in respect of
any loss or damage suffered by any recipient as a result of or in connection with any information provided,
or any course of action determined, by it or any third party, whether or not based on any information
provided.
The inclusion of a link to an external website by Markit should not be understood to be an endorsement of
that website or the site's owners (or their products/services). Markit is not responsible for either the content
or output of external websites.
Opinions, statements, estimates and projections in this presentation (including other media) are solely
those of the individual author(s) at the time of writing. They do not necessarily reflect the opinions of Markit.
Neither Markit nor the author(s) has any obligation to update, modify or amend this presentation, or to
otherwise notify a recipient thereof, in the event that any content, information, materials, opinion, statement,
estimate or projection (collectively, "information") changes or subsequently becomes inaccurate.
Copyright © 2011, Markit Group Limited. All rights reserved and all intellectual property rights are retained
by Markit. Any unauthorised use, disclosure, reproduction or dissemination, in full or in part, in any media or
by any means, without the prior written permission of Markit Group Limited, is strictly prohibited.
13