Advanced Economies: Broad based upturn in growth through mid-2017 - NAB

After several periods of sluggish growth, the pace of expansion in the big advanced economies lifted quite markedly in the June quarter, notes the analysis team at NAB. 

Key Quotes

“Second quarter growth averaged 0.7% qoq across the G7, well above the 0.4% growth in the March quarter and the 0.5% quarterly expansion averaged over the year to March. Comparing G7 GDP with its year-earlier level, growth has surpassed 2% yoy for the first time since the first half of 2015.”

“The second quarter pick-up in advanced economy growth has been broad-based.  North America saw quite solid economic outcomes through mid-2017 with US GDP growing by 0.8% in the quarter while the Canadian economy grew by over 1%.  Japan, which has experienced quite a weak recovery from the 2008/9 financial crisis and global recession, also grew strongly, with quarterly growth in June of 0.6%.”

“The Euro-zone has been another under-performer in terms of output growth through the last decade but here too conditions have been improving.  Euro-zone GDP grew by 0.6% in the second quarter, up from March’s 0.5% with Germany the strongest big Euro-zone economy and Italy the weakest.  The UK was the weakest G7 economy in terms of growth for the second consecutive quarter and Brexit concerns appear likely to weigh on business sentiment and investment over the next year.”

“Partial data on industrial output and trade along with the monthly business surveys provide the most timely measures of the pulse of economic growth in the advanced economies.  Industrial output grew by 1.3% in the June quarter across the advanced economies, three times the 0.4% rate seen in the prior quarter.  The trade data confirms the lift in momentum – with advanced economy export growth lifting from 0.7% to 1.8% between the first and second quarters of the year and comparable data for imports shows a similar lift in quarterly growth from 0.7% to 1.1%.”

“The business surveys confirm that expansion has continued through to August with manufacturing showing especially solid results  across the US and Europe.  Service sector trends are more mixed –  the UK is looking softer but Japan and the Euro-zone had  picked up but have eased more recently.”