Growth surprises, and prices rise
Global growth improved across all regions in February.
In G10 countries, growth returned to positive territory. In much of the world, stronger activity led to positive surprises in reporting data. As activity rose, so did inflation.
The U.S. PMI Composite Index moved back into expansion, driven by the services sector. Service providers' business expectations jumped, while new orders remained in contraction. Prices rose faster in January than in the final three months of 2022, but slower than in early 2022. The University of Michigan Consumer Sentiment Index improved. Households indicated better conditions and better prices for purchasing durable goods. Home-buying conditions were also better.
In Europe, growth also improved but remained negative. Euro area PMIs showed better services activity, but manufacturing remained in contraction. In services, new orders and backlogs continued to rise while future business expectations and employment changed little. The pace of price increases was about the same as in prior months; deceleration in price increases mostly ceased.
This six-year illustration shows stable GDP up until the collapse from the coronavirus pandemic.
Feb '20–April '20
The Covid-19 pandemic causes a global economic downturn.
May '20–Dec '21
Global growth starts to surge and stays at elevated levels as life continues to normalize.
Rising interest rates and inflation, and the fallout from the Russia-Ukraine War, cut global growth prospects.
Source: Putnam. Data as of February 28, 2023. 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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