Healthy growth in Western economies

CHART OF THE WEEK

Most of the major western economies’ advance estimates for third-quarter growth have been released. The data indicates a resilient European economy following the Brexit vote and confirms the upturn in US growth.

  • US GDP grew at an annual rate of 2.9% with household spending, although slower than in the second quarter, remaining a significant growth driver. Stronger exports along with a boost from inventories also contributed to GDP growth, whereas investments remained disappointing.
  • In the Eurozone and the UK, detailed growth data have not yet been published but advance estimates are 1.4% for the Eurozone, in line with expectations, and 2.0% for the UK, which is above expectations.

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OUR ANALYSIS

Purchasing Managers’ Index figures in recent months suggest that the improvement in western growth is set to continue.

  • In the US, September’s ISM index readings jumped sharply and flash PMI releases for October also show sharp rebounds.
  • In the Eurozone, October’s composite PMI index jumped to 53.7, a record high since January 2016.
  • In the UK, equally buoyant data are a sign that the immediate consequences of Brexit may not be as harsh as initially feared. Its longer-term impact, however, will remain significant.

The opinion expressed above is dated October 31st, 2016 and is liable to change

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Julien-Pierre Nouen

Directeur des études économiques et de la gestion diversifiée