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Monday, July 28, 2014

Mixed Forecasts Characterize Outlook for Global Growth

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Credit: sheelamohan on FreeDigitalPhotos.net.

Recent figures compiled by the Conference Board for key regions around the world show a mixed outlook for economic growth, a situation that will doubtless affect procurement activities in many industries and possibly raise supply chain risks. For example:

  • Business activity and consumer confidence in the U.S. is rebounding somewhat, although the outlook is still sluggish;
  • The European economy continues to be weak, with countries in the south, not surprisingly, in far worse shape than in the north; and
  • Chinese leaders have suggested that market forces might be a remedy for that country’s slowing economy, but few serious reforms are expected—and none that will reverse a relentless slowdown in growth.

Today through Monday, I’ll look at what the Conference Board’s numbers reveal about economic growth around the world. This posting is about the U.S.

The Conference Board reports that its Leading Economic Index (LEI) for the U.S. increased 0.6 percent in April to 95.0 (2004 = 100). But the up-and-down nature of the economy is evident in the pattern of growth: a 0.2 percent decline in March and a 0.4 percent increase in February.

Housing permits, the interest rate spread and labor market conditions are credited for the April rebound, although consumer outlook on the economy remains weak and there was declining industrial production last month.

Going ahead, the Conference Board notes that its Coincident Economic Index, a measure of current conditions, is growing slowly, and is in fact 3.5% higher on an annualized basis than six months ago. This points to expansion, but the board advises that for every positive factor affecting the economy, there are unknowns (e.g., consumer and business confidence) and risks (sequestration and its impact on the private sector).

Tomorrow, I’ll take a look at the numbers for Europe.

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