Monday, 16 March 2015

The best bits of Markit's Global Business Outlook surveys

As regular readers will know I am a big fan of Markit's economic and finance output such as can be found here.  Despite being a very regular reviewer of their website I have never come across the Markit Global Business Outlook (link here) survey before.

What an interesting new source as the Markit site has not only the composite global report but also a number of individual country ones too.  So what are the best insights I have found?

First...the overall global survey looks decidedly poor in absolute terms:

Why was this?  Well 'the waning largely reflected a fading of sentiment from last year’s peaks in the US and UK...Optimism in the service sector fell to its lowest since the survey was first conducted in 2009, while manufacturing optimism remained well below par'.  

Crikey.  And the micro underpinnings are hardly great either: 

'Global hiring intentions also fell to a new survey low, and investment intentions only picked up modestly from October’s trough'.

The global expectations differentials can be best seen from a comparison to the previous Global Outlook Surveys where the deterioration (admittedly from peaks) in the US and UK was also apparent less surprisingly in Brazil and also (more surprisingly) in India.  By contrast the Eurozone countries, China and - very surprisingly (although see later too) - Russia showed improvements.  
Moving back to the US I was struck by the negativity of its national survey (although unsurprised that the strong dollar and the threat of rising interest rates was having such an impact - more fuel to the fire for the Fed later in the week to surely conclude that the dollar is too strong and a near-term interest rate rise is unlikely).  

Looking at the other 'key developed economies' the Eurozone now outpointing the US on this measure (with Japan still lagging - 'once again seeing the weakest prospects of all countries monitored') is probably the most noteworthy point...
...with the Eurozone prospects being decidedly more optimistic:

'Companies have lifted their hiring and investment intentions and are more positive about their business prospects. Spain and Ireland look set to continue to be the star performers, but improved optimism in Germany, France and Italy bodes well for the region’s recovery to gain momentum and become more sustainable'  

In the emerging markets the most noticeable trend is the compression of Brazilian net optimism: 
So what to make of all of this?  It is hardly reflective of a rampant global economy is it?  And yet global stock market ratings remain very full...

Hard not to conclude 'thanks unorthodox global monetary policy'.  

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