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Recession risk hits U.S. and Europe

Global economic activity continued to slow. Inflation increased, and central banks remained hawkish. U.S. purchasing manager indexes (PMIs) deteriorated noticeably during June, and new orders for manufacturing and services moved into contractionary territory. Data also weakened in Europe, as slowing spread from manufacturing to services. Deceleration in U.K. growth continued at a moderate pace, but labor market tightness eased a bit. Central Europe, the Middle East, Africa, and Latin America markets also slowed. Exceptions to slowing were in Asia. Japan's business activity rose solidly in June, with services PMI at the highest level since 2013. In China, May activity surprised slightly to the upside, and both exports and imports bounced back. As China's Covid-related mobility restrictions eased in June, PMIs moved to expansion.

LONG-TERM CYCLE

This six-year illustration shows stable GDP up until the collapse from the coronavirus pandemic.

Source: Putnam. Data as of June 30, 2022. We base our Global GDP Nowcast on a tailored methodology that captures daily data releases for the most essential growth characteristics for each of 25 countries — including purchasing managers' index data, industrial production, retail sales data, labor market metrics, real estate price indexes, sentiment indicators, and numerous other factors. The mix of factors used for each market may change over time as new indicators become available from data sources or if certain factors become more, or less, predictive of economic growth.

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