The global economy is humming in late 2017, a welcome development after years of underwhelming growth.
The global composite PMI currently stands at a two-and-a-half year high, with activity levels improving at the fastest pace seen in three years during the September quarter.
And, as seen in the chart below from the International Air Transport Association (IATA) below, the improvement in that sentiment survey is now being reflected in hard economic data.
It shows year-on-year growth in global air cargo, overlaid against the new orders subindex in the global manufacturing PMI survey.
Freight tonne kilometres, or FTKs, measures the amount of cargo multiplied by distance travelled.
Mirroring the improvement in the new order subindex in the PMI survey, FTKs have also risen sharply over the past year, growing by 12.1% in August compared to a year earlier.
“[This is] still well ahead of the five and ten-year average rates of 4.4% and 3.2% respectively,” says IATA. “Annual FTK growth has now been in double-digit territory for five of the past six months.”
There’s now more stuff being whizzed around the world by air, something that IATA puts down to improved economic conditions.
“The turnaround in air freight’s fortunes over the past 12-18 months has coincided with a broad-based pick-up in global economic and trade conditions,” it says.
“More generally, the recent outperformance of air freight relative to wider world trade remains consistent with the typical pattern seen at the start of upturns in the global economic cycle.
“This relates in large part to the ability of air freight to allow firms to restock quickly.”
IATA says that all regions except Latin America posted double-digit annual international volume growth in FTKs in August, led by airlines in Africa.
That’s yet another sign that not only is the global economy strengthening, but that the recovery is board-based in nature.