{"id":2599,"date":"2008-06-10T08:58:52","date_gmt":"2008-06-10T08:58:52","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=2599"},"modified":"2025-03-27T15:48:39","modified_gmt":"2025-03-27T15:48:39","slug":"global-economy-still-muddling-through","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=2599","title":{"rendered":"Global economy still &#8220;muddling through&#8221;"},"content":{"rendered":"<p>Bears were cheered by the latest US labour market report, showing a jump in the unemployment rate to 5.5% in May. On closer inspection, however, much of the rise was due to an expansion of numbers seeking work, particularly among people aged 16-24. (The unemployment rate for this group jumped from 11.0% to 13.0%; some reversal is likely next month.) <\/p>\n<p>Employment trends are more relevant for assessing economic growth. Two measures are reported &ndash; one based on payrolls and the other on a survey of households (from which the unemployment rate is derived). Payroll employment has been falling since December but the household survey measure has been broadly stable &ndash; see first chart. The rate of decline of payrolls has been lower than during the 2001 and prior recessions. Allowing for productivity growth of about 2% annualised, recent developments remain consistent with GDP expansion, albeit sluggish. <\/p>\n<p>Export strength, particularly to the emerging world, continues to support&nbsp;the US economy &ndash; the export orders index in the ISM manufacturing survey hit a four-year high in May. The second chart shows industrial output growth in the &ldquo;E7&rdquo; major emerging economies together with a composite leading index based on OECD data. (The OECD does not publish a leading index for Taiwan so the national index has been used instead.) Output rose by an estimated 9% in the year to April, which compares with sub-1% growth in the G7. The leading index suggests a&nbsp; further slowdown over coming months but remains notably stronger than during prior global economic downswings. <\/p>\n<p>As discussed in the last post, inflationary pressures are forcing monetary policy tightening in emerging economies. However, interest rates are currently below a &ldquo;neutral&rdquo; level in many countries and in some cases attempts to tighten are being frustrated by an expansion of liquidity due to currency inflows. (China&rsquo;s foreign exchange reserves rose by $78 billion in April alone.) Policy restriction will eventually lead to a significant slowdown in the emerging world but this is probably a story for 2009-2010 rather than this year. <\/p>\n<p>The further surge in oil prices is casting a cloud over prospects but the evidence to date is that the US and global economies continue to hold up better than most economists expected. <\/p>\n<p><span class=\"full-image-float-none\"><img decoding=\"async\" style=\"width: 500px; height: 300px\" alt=\"US_employment.jpg\" src=\"\/storage\/US_employment.jpg\" \/><\/span><\/p>\n<p><span class=\"full-image-float-none\"><img decoding=\"async\" style=\"width: 500px; height: 300px\" alt=\"E7_Industrial_Output_OECD_Index.jpg\" src=\"\/storage\/E7_Industrial_Output_OECD_Index.jpg\" \/><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Bears were cheered by the latest US labour market report, showing a jump in the unemployment rate to 5.5% in May. On closer inspection, however, much of the rise was due to an expansion of numbers seeking work, particularly among people aged 16-24. (The unemployment rate for this group jumped from 11.0% to 13.0%; some [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2599","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2599","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2599"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2599\/revisions"}],"predecessor-version":[{"id":4908,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2599\/revisions\/4908"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2599"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2599"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2599"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}