Global business money trends are much weaker than a year ago, supporting the view that the current economic slowdown will extend.
The monetary forecasting approach employed here places emphasis on narrow money (i.e. an M1-type measure), partly because of its superior historical performance. Broad money, however, is also monitored, including its sectoral split between households, non-financial businesses and non-bank financial institutions. Non-financial business liquidity is a key driver of investment and hiring.
Annual non-financial business broad money growth in the major economies is currently the weakest since 2009. Holdings have slowed sharply in the US and are contracting in the Eurozone and UK – see chart. Only Japan is displaying resilience.