Release date 12. September 2022
Leading indicators in global economy in search of a bottom
Qualitative data on sector activity in Q2 2022 revealed that gross profitability (added value in sales) of Slovenian private sector worsened in Q1 and Q2, as gross margin was lower y-o-y (quarterly comparison is not possible because data are not seasonally adjusted) by 6 and 4 p.p., respectively. It was so low back in Q2 2018. It was lower in manufacturing by 2 p.p. (28%) and in retail and wholesale trade by 3 p.p. (11%) in one year. It was higher mainly in less important services (measured by value added), namely in professional, scientific and technical activities (+5 p.p.), real estate (+4 p.p.) and water supply, sewage and waste management (+2 p.p.). It was unchanged in ICT activities (46%). Companies earmarked 5% of sales for investments, which was the same as a year ago. This data is based on a sample questionnaire and is provisional in nature. Source: Statistical Office of the Republic of Slovenia
July’s exports of goods (EUR 4.6 billion) were significantly lower than expected (EUR 5.2 billion; EUR 5.3 billion in June), which, in our estimation, already reflects the real drop in exported goods manufactured in Slovenia. On the back of rising trade of manufactured goods not produced in Slovenia and higher goods prices, exports were up by a third y-o-y, similar as in seven months of 2022. Import growth also slowed (+36%) in July and was 46% higher y-o-y in seven months of 2022. Source: Statistical Office of the Republic of Slovenia
More economic topics are below in the attachment.
Global composite PMI fell below 50 in August (to 49.3; 50.8 in July), suggesting a slight contraction in the global economy, for the first time since June 2020. Volume of new orders contracted, world trade decreased, and the amount of excess capacity increased, which should at least alleviate price pressures. Five out of six sectors of the private economy registered declines (business services, consumer goods, consumer services, intermediate production and production of capital goods). Only the financial sector recorded slight growth. Declines were mainly present in developed economies (USA, Japan, Germany, Italy, United Kingdom), namely in both manufacturing and services. Economic activity picked up in India, Brazil and China. In world's 14 largest economies, employment increased, with the exceptions being China and Russia, where it declined. Services indicator fell to 49.2 in August, with services growing in China, the United Kingdom, India, Brazil, France, Italy, Spain, Australia, Kazakhstan, and Ireland. In USA, Japan, Germany and Russia, the volume of services provided decreased. Source: JP Morgan, S&P Global
European sector PMI showed that current production/activity decreased in August mostly in forestry and paper production, chemical industry, automotive chain, metal and mining production, building materials, construction and engineering, real estate business, transport as well as in the manufacturing of household products. Only five sectors recorded growth: software and IT services, financial activities without banks, technological equipment, pharmaceuticals and health services. Data on new orders were quite similar, indicating poor dynamics in the coming months as well. They decreased the most in forestry and paper production, construction material production, chemical industry, and metal and ore production. Only three sectors saw a slight increase in new orders. Despite this, employment continued to increase on average, most notably in production of technological equipment. Source: S&P Global
Autumn forecast: High energy prices push German economy into recession; ifw Kiel; 8 September 2022. Available at: https://www.ifw-kiel.de/publications/media-information/2022/autumn-forecast-high-energy-prices-push-german-economy-into-recession/
Comment/Abstract: According to the latest forecast of the Kiel Institute, the upturn in the German economy will be sharply interrupted by the consequences of the Russian war against the Ukraine. In the current year, GDP is still expected to grow by 1.4%, 0.7 points less than forecast in June. For next year, the Kiel Institute is revising its forecast downward by 4 p.p.—instead of a strong rebound, the German economy is expected to contract by 0.7%.
Industrial production, EU-27, July, (14 September), Eurostat; -1.6% m-o-m
Comment: After a 0.6% growth in June, July is probably the first month in a raw of several months, when industrial production is expected to decline across EU-27. High energy costs are the main reason for declining production.
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