For the most part, October was a pretty good month for the global economy. Most economic reports reflected resilience despite elevated political uncertainty and a lengthy government shutdown in the world’s largest economy: the U.S.
“Did the consumer even realise there was a federal government shutdown?” asked Mitsubishi economist Chris Rupkey after Wednesday’s extraordinary October retail sales report.
However, the early November readings on the economy are looking a bit jittery.
First, we just learned that China’s HSBC Flash manufacturing PMI missed expectations and fell to a two-month low of 50.4 in November from 50.9 in October, signaling a significant deceleration in growth.
“Although the headline figure of 50.4 still indicated expansion, we caution that the acceleration trend of activity growth is reaching its end,” warned Societe Generale economist Wei Yao.
Then there was the euro zone, whose Flash Composite Output Index fell to 51.5 in November from 51.9 in October. Economists were expecting a reading of 52.0.
“Any improvements were largely confined to Germany, where the PMI has notched up the best growth since mid-2011 so far in the fourth quarter, signaling a 0.5% increase in GDP,” said Markit economist Chris Williamson. France, on the other hand, showed further signs of being the sick man of Europe‟ with output showing a renewed decline and raising the risk that GDP could fall again in the fourth quarter, constituting a renewed recession. Meanwhile growth outside the big two‟ slowed to near-stagnation.”
Later today, we’ll get the U.S. Flash PMI report. Let’s hope this doesn’t turn into a trifecta of bad news.