The latest round of leading indicator and manufacturing data shows while activity continues to grow at a decent rate in the OECD, the second derivative has fallen to zero, with the acceleration seen in 2H13 now coming to an end. Emerging economies continue to show slow growth.
An inflection point in growth is not a cataclysmic disaster by any stretch of the imagination. But these points do shift the balance of risks for many markets, with commodities particularly affected via inventory changes when demand decelerates.
Adding emerging markets to the picture is a little problematic as the Chinese indicator tends to be lagging rather than leading. But even so, it looks like emerging markets are becoming enough of a drag to drag the global picture lower.
Industrial production growth has seen a slowdown in the pace of improvement and is currently growing at just under 4%YoY according to CPB data. Actual growth is probably a bit stronger given these data use fixed weights, with faster growing Asia continuing to gain share of the global total.
Its clear that the US continues to power manufacturing in the advanced world and has reclaimed its pre crisis peak. While the recovery has been slow, it has been better than for Europe and Japan, which are struggling to reclaim 2011 let alone pre 2008 levels.
European weakness is particularly important given leading indicators have been improving. March data released data showed that IP actually fell in March.
The fall in the emerging market data shown in the chart on the right is more seasonal than anything else. But the pace of growth has definitely slow in China,
as the data for March indicate.
