Main takeaways:
  • Global PMI continues trending down.
  • But there is a clear divergence between emerging and developed countries...
  • ...that suggests convergence of growth between the regions is likely to continue...
  • ...resulting in a slowdown in global industrial production growth compared to pre-crisis growth pace.

Global PMI continues trending down...

... with a clear divergence between developed and emerging markets happening in the last 6-7 months.

This suggests industrial production in developed economies should continue to grow at around 1%...

...while industrial production growth in EM economies should slowdown further in the coming months.

And within emerging countries, the slowdown in industrial activity is driven by Asia (China)

The EM and DM PMIs suggest a convergence of growth between the regions is likely to continue...


... and as a result global industrial production growth is likely to slowdown. The chart below shows that world industrial production is usually cyclical -- except in the unusual expansion period between Dec/2001 and Feb/2008 and in the last 4 years up to mid-2014.
The previous slowdown / contraction periods (Dec/94 to Dec/95, Oct/97 to Oct/98, Aug/2000 to Dec/01, Feb/08 to Mar/09) were all period of crisis (Mexico, Asia, Nasdaq, and the GFR) and lasted about one year.