Overnight, we got further evidence out of Europe that the manufacturing sector is slowing, with the region’s PMI falling to an 18 month low. We’re not at contraction yet, but a 52 in manufacturing is pretty close.
Photo: Societe Generale
But, it’s not only the U.S., China, and Europe! Even Brazil, which was growing at a rampant pace as recently as last quarter, is now showing signs of a slowdown.
From Societe Generale’s Alejandro Cuadrado:
Despite the strong growth posted in Q1 2011 (5.4% saar), above the 4.0% trend, several indicators (lower consumption, off-peak confidence, inventory build-up and credit and labour moderation) suggest a slowdown ahead. This is already reflected in our 4.1% 2011 GDP growth forecast, down from last year’s impressive 7.5%. And it is a result of monetary and fiscal stimuli withdrawal helping to soft-land the economy from otherwise unsustainable growth levels.
It’s is not all bad news for Brazil, however. Pre-World Cup and Olympics construction should keep money flowing for some time, according to Cuadrado. And, on top of that, the country’s credit market, mortgage market more specifically, is really only starting to pick up now.
But what this does show is that we’re in the midst of a shared global slowdown in growth. Not a recession, but definitely a rough patch for everyone, not just the U.S. or China. It’s unknown whether the world economy has the strength to kick start strong growth again, without stimulus from governments in the U.S., China, and Europe.
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