Global industrial production has been slow in Q1, with the <2%YoY growth recorded the last 6 months one of the soggiest patches of activity in the last 20 years.
Growth rates will improve as the comps get easier, with the declines in the Euro area and Japan now turning into gains. But the level of activity is not particularly vibrant, with leading indicators not suggesting a rapid turn around anytime soon. This leaves IP growth for 2013 as a whole at a slow 2.5-3%.
The advanced world remains sluggish. Euro and Japan are now rising, but remain miles below where they were back at the start of 2011. The trend in US IP also seems to have flattened out with growth rates underwhelming since the middle of 2012.
Emerging Asia, which is mostly China, remains the key engine, but even that is starting to slow down. While these data are reportedly seasonally adjusted, there is still a visible issue with the data particularly around Chinese New Year and the summer lull in manufacturing, which is now approaching.
It is also concerning that there is so little IP growth in the emerging world outside of Asia and perhaps this is being reflected in the big sell off in emerging markets at the moment. The recent drop in EM currencies should help if sustained, but this is only a very recent phenomenon and will take to time to make an impact.
