Putnam Investments | The Macro Reportmarket
Putnam Global GDP Nowcast | June 2023

The Putnam Global GDP Nowcast index is a proprietary GDP-weighted quantitative model that tracks key growth factors across 25 economies. This index and individual country indexes are used as key signals in Putnam's interest-rate and foreign-exchange strategies.

Growth continued, and eurozone inflation eased

SHORT-TERM TREND

Global growth continued at a slightly weaker pace in May than in April.

▲2.01%

In the U.S., the labor market remained strong, which keeps the probability of a recession in 2023 low. Employment has weathered persistent weakness in manufacturing. Within this sector, only transportation equipment showed growth, and even in this area, new orders are slowing. Most non-manufacturing sectors showed job growth in the May survey of businesses. The household survey was weaker, and the unemployment rate increased from 3.4% to 3.7%. The gap between the surveys has been in place for several months, as it was during the dot-com bubble when the rate of business formation was similarly high.

Recent data for both the eurozone and China was relatively weak. The biggest surprise was a decline in euro area inflation. Energy inflation decreased partly due to the effects — the comparison with last year's sharp price increases — and partly to a sequence of declines in recent months. This bottoming out of energy prices may be temporary, as natural gas prices could tick higher again. As in other parts of the world, core goods inflation is showing signs of gradually easing.

LONG-TERM CYCLE

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.

Jan '22–present

Central bank tightening, inflation, and Russia-Ukraine War increase volatility and uncertainty.

Source: Putnam. Data as of May 31, 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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