Things Are Picking Up!

Image source:

What's going on?

A variety of economic measures out on Friday suggested that the pickup in global economic growth continued in February. But it wasnt all rainbows and sunshine: there were some signs that the momentum is slowing down just a bit.

What does this mean?

On the manufacturing front (e.g. companies that make stuff like engines and appliances) an important survey of global activity suggested manufacturers had their busiest month in six years. While manufacturing accounts for less than 20% of the economy in countries like the US and the UK, its still an important part and can support services industries (e.g. a factory thats doing well might hire more accountants and lawyers).


According to an influential survey, the growth of the services sector slowed modestly in February versus January in the US, but still signaled fairly buoyant growth. A similar survey in the UK was perhaps more concerning: momentum slowed more than expected, leading some economists to warn that the Brexit vote is starting to have a negative impact on the economy.

Why should I care?

For markets: A rebounding global economy has been an important factor in pushing stock prices higher.

Investors often cite President Trumps potential policies (like lower taxes and less government regulation) as reasons to be optimistic about stocks, but the recovering global economy has also been very supportive of stock prices. As activity around the world increases, its easier for most companies to make sales and boost profits.


The bigger picture: Global growth remains near a historically low level.

Growth appears to be picking up, but its come off of a low base. If the momentum were to peter out over the coming months, investors would likely return to fretting over low economic growth. The question is whether were experiencing an inflection point that will lead to sustainably higher growth much more evidence is needed before thats a valid conclusion.

Originally posted as part of the Finimize daily email.

The top 2 financial news stories in 3 minutes. Join over one million Finimizers

Read next

AB InBev Needs A Stiff Drink

Sign up to Finimize

Get the two most important global financial news stories each day. Sent at midnight UK time.

Get started with one email a day

The top financial news stories in 3 minutes.