GLOBAL MACRO: Growth Indicators Subdued But Not Flashing Red Yet

Markets have become increasingly concerned over the global growth outlook with signs that US confidence has been hit by uncertainty over US tariffs and likely retaliation. The RBA’s Hauser said that the Fed estimated that global growth was reduced by 1pp in 2019 due to uncertainty alone. Growth indicators are still suggesting that global IP should hold up for now. They continue to be at subdued levels though in line with recent muted growth, but are yet to flash red. 

• The Q1 average of JP Morgan’s global composite PMI at 51.7 is below Q4’s 52.4 driven by services signalling slower but still positive growth. February’s composite was the lowest in over a year at 51.5. Manufacturing though has seen a pickup in Q1 but it is too early to tell if this is an attempt to front run US tariffs. China’s manufacturing PMI is down slightly in Q1 at 50.5.
• LME metal prices have been moving sideways for the last year and picked up at the start of this year but within the recent range. This is in line with continued global IP growth of around 2-2.5%. Iron ore has also been moving sideways, while wool has been recovering over the last 6 months.

Global IP y/y% vs LME metal prices