Surveys giving mixed messages at start of Q2

Q1 GDP releases have confirmed that the major economies avoided recession at the start of the year and some of the more recent survey data suggest that this resilience continued into Q2. The composite PMI output index for developed economies rose from 52.6 to 53.7 in April, suggesting not only that growth has remained positive but that it has accelerated. However, it is worth noting that the PMIs have been the most optimistic of the survey indices lately and others such as the US ISM and the euro-zone EC Economic Sentiment Indicator have broadly flatlined at levels consistent with little or no growth. One possible reason for this is that the latter two cover the retail sector whereas the PMIs do not. In any case, monetary indicators confirm that policy is becoming a stronger headwind to economic activity and we still suspect that the major economies will struggle to grow in the months ahead.