Markit economic overview

The following is an extract from Markit's monthly economic overview. For the full report please click the link at the bottom of the article.

Global economic growth edges up from December's 14-month low

The global economy started 2015 on a weak footing, according to Markit's PMI data. The rate of expansion picked up slightly for the first time in six months, but the PMI remains consistent with global GDP rising at an annual rate of just 2.0%, far below typical pre-crisis growth rates. Emerging markets remain particularly subdued, with the surveys indicating GDP growth of just 5%. Developed world growth picked up slightly.

Global PMI and economic growth

Developed v. emerging markets

US PMI surveys raise questions over economy's strength and rate hike timing

Markit's US PMI surveys correctly anticipated the sharp slowing of the US economy from an annualised rate of 5.0% in Q3 of last year to 2.6% in Q4, and January data point to a similarly modest pace at the start of Q1. The rate of growth remained strong enough to generate another month of robust jobs growth in January, but the slowdown leaves uncertainty over whether the Fed will start hiking interest rates later this year.

US economic growth (GDP v PMI)*

*pre-crisis PMI uses manufacturing data only

US labour market

UK economy picks up after soft end to 2014, household mood at post-crisis high

Having correctly signalled a slowing of the UK economy in Q4 , the UK all-sector PMI rose from December's 19-month low but remained far lower than last year's peaks, signalling GDP growth of 0.5% in Q1. Growth is expected to pick up further, however, as household optimism about future finances hit a post-crisis high on the back of rising pay and falling inflation (down to 0.5%), the latter likely to help keep interest rates low for longer.

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UK economic growth (GDP v PMI)

Inflation and household sentiment

Use the download link below to access a full overview of the January PMI surveys, including details of all major economies, policy implications and the market impact.

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