JPMorgan: Global economy might pivot to above trend growth in 3Q


“The 2Q US GDP release delivered a significant upside surprise with a 4% annualized gain last quarter and an average 0.7% annualized upside surprise to the previous three quarters. Although the 2Q bounce needs to be viewed alongside the deep contraction it followed, available July releases employment, initial claims, auto sales, ISM manufacturing, PMI services and consumer confidence all point to growth momentum being maintained at an above trend pace this quarter”, said JPMorgan says in its Global Assets Allocation.

“Global manufacturing looks to be rebounding from the sharp deceleration over the course of 2Q. With global output and orders readings both holding stable at about 54, the PMI is consistent with 4.5% annualized gains in factory output this quarter.”

In Asia, “Hard activity readings in EM point to production and export growth lifting sharply into mid year. It is also encouraging to see that the regional output manufacturing PMI moved up 1.1 point in July to its highest level since May 2011. China’s July data also showed a welcome lift in activity consistent with our call that growth stabilizes above 7% in 1H14, while policy makers’ announcement of a new targeted lending scheme appears to have taken out some near term downside tail risks.”

Regarding the Euro area, JPMorgan analysts also say that the recovery is underway and it’s regaining momentum, as indicated by the welcome move up in the composite PMI. “While the data flow has been mixed, and Italy now looks to have dipped back into recession in 1H14, the composite PMI has always been the single best indicator of growth in the region and the latest July reading is consistent with our call for growth to pick up.”

However, JPMorgan experts also point out that the false dawns of the past four years are fresh in their memories and “it is far too early to dismiss lingering concerns that the recent improvement could prove transitory and turn the pivot into plotz”

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

Be the first to comment on "JPMorgan: Global economy might pivot to above trend growth in 3Q"

Leave a comment