The view here that US / global economic momentum is starting to pick up is supported by the American Chemistry Council’s chemical activity barometer. Calculated Risk has noted that this barometer usually leads US industrial output; the first chart shows that it also moves ahead of global (i.e. G7 plus emerging E7) activity. Six-month growth of the barometer in June was the strongest since August 2014.

The chemical activity barometer’s components are grouped under the headings of 1) production, 2) equity prices of chemical companies, 3) product prices and 4) inventories / other indicators. All four groupings have increased for three consecutive months.

Another sign of strengthening industrial activity is a recovery in the six-month change in world steel output, which was modestly positive in May – second chart.

The world equity analysts’ revisions ratio, meanwhile, maintained its recent higher level in June – third chart.

The UK commentariat’s claim that the economy has slowed in the run-up to the EU referendum continues to be contradicted by incoming evidence. The June CBI industrial trends survey reported strong output expectations and a rise in pricing plans, probably partly reflecting recent sterling weakness – fourth chart.

Stronger activity news is consistent with an earlier pick-up in global six-month real narrow money growth, which is estimated to have remained at its strongest level since 2011 in May, based on data covering two-thirds of the universe – fifth chart.

The sixth chart shows adjusted real money growth measures advanced by nine months – the average historical lead time between money and output. The red line adjusts for a long-run downward trend in the rate of change of the velocity of circulation; the green line additionally takes into account the slope of the G7 government yield curve. Both measures suggest a pick-up in industrial output growth into early 2017 (the final data points are for February 2017).

A reader asked whether narrow money buoyancy reflects increased cash hoarding due to low / negative interest rates, with the implication that it may not signal stronger economic activity. The answer, in general, is no. The narrow money pick-up has been driven by demand deposits, not currency holdings. Eurozone M1, for example, grew by an annual 9.7% in April, with the currency component up by 4.6% and overnight / demand deposits by 10.8%.