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More evidence of global stabilisation

Posted on Tuesday, June 28, 2011 at 04:42PM by Registered CommenterSimon Ward | CommentsPost a Comment

The forecast of a reacceleration in G7 industrial momentum later this summer – based on faster real money supply growth since early 2011 and an unwind of Japan supply disruptions – is supported by today's Federation of Korean Industries survey for June.

Korean indicators are often early to detect shifts in global momentum, reflecting the economy's orientation towards exports (52% of GDP in 2010) and intermediate goods production. A slump in FKI manufacturing expectations this spring foreshadowed a sharp fall in G7 PMI new orders – see previous post.

Korean expectations recovered modestly in May, maintaining the improvement in June – see chart. This suggests that G7 new orders bottomed in May or, more likely, June.

Today's US Richmond Fed manufacturing survey provides a further hint of revival, with current and expected new orders rising in June, bucking the trend of weakness in earlier surveys from other regions.

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