Signs of global stability mask pockets of weakness

Now that all major economies have released their Q3 national accounts, it is clear that the world economy pulled off a third consecutive quarter of around 3% annualised growth. (See Chart 1.) And over the past six weeks or so, there has been mounting evidence that the downturn in global industry may be reaching a trough. Indeed, a variety of survey indicators have stopped deteriorating and it appears that growth in world trade volumes and industrial production have begun to bottom out. But the improving global picture hides pockets of weakness – most notably in Germany, where the manufacturing sector looks, if anything, to have taken a turn for the worse. What’s more, despite the stronger than expected gain in US non-farm payrolls in November, a wide range of labour market leading indicators point to jobs growth soon slowing in advanced economies.