With 20 key economic variables covering 20 major countries, the latest 20/20 Vision chart pack from Fitch Ratings reveals a major trend in the resilience of the recovery in the eurozone. The report plots high-frequency macroeconomic data and includes readings on PMI balances, credit growth and labor market performance.
“The eurozone saw one of the most impressive improvements in PMI balances amongst the advanced countries in the second half of 2016 and recent readings have corroborated this trend,” said Brian Coulton, chief economist at Fitch. “The steady rise in credit growth to the private sector is also suggesting that ECB QE [European Central Bank quantitative easing] may have started to gain some traction on the economy, while a pickup in exports partly reflects the stabilization in emerging markets.”
A key component of the persistent expansion in the area, as indicated in the ratings agency’s March Global Economic Outlook and subsequent data releases, has been improving labor market conditions. Consumer confidence has been helped by ongoing job growth. Nominal wage inflation has enjoyed a small uptick, though still below the ECB’s inflation target, Fitch said.
Data from China has been better than expected, with an increase in industrial production not seen since late 2014. Data is mixed from the United States and United Kingdom, with soft nonfarm payrolls in the U.S. and weakening retail sales growth in the U.K., Fitch said.
Trade is leading the growth seen globally, according to Wells Fargo. The bank’s recent Global Review said that the global economy is on the right path. Though China is not contributing what it once did at the start of this century, its first quarter GDP indicates an economy growing slightly more than market expectation. Strong performance by Chinese trade in March and improvement in international reserves are encouraging signs of global growth, according to Wells Fargo.
Low but positive growth is expected this year in troubled Brazil. The country’s monthly economic activity index in February was the strongest in nearly three years. Data from the U.K. indicates that the economy decelerated in the first quarter of this year, but real GDP growth has held up better than expected since last June’s Brexit referendum, Wells Fargo said.
– Adam Fusco, associate editor