Chart of the Week: OECD private sector confidence

Macro

Christopher Dembik

Head of Macro Analysis

Summary:  Our 'Macro Chartmania' series collects Macrobond data and focuses on a single chart chosen for its relevance.


Click here to download this week's full edition of Macro Chartmania.

Two days ago, the IMF made large cuts to its economic forecasts, while calling for policymakers to pour liquidity in financial markets and support households and businesses hit by the pandemic. The organization expects that the global economy will go through its worst global recession since the Great Depression with a contraction that could be about -3% this year. What is probably the most striking is that the Asian growth engine is completely stopped as the region is expected to suffer zero growth in 2019 (see my latest update on global forecast).

In OECD countries, the outlook is even worse with a recession that could be around -5.9% in the United States and -7.5% in the European Union. The latest OECD business and consumer surveys released last week have not captured yet the full impact of the COVID-19 on private sector confidence. We should have a better picture of what is really happening when the next surveys will be released on May 12.

Since the beginning of the year, private sector confidence has started to decrease with the biggest slump observed for consumer confidence. The index has dropped for the first time since November 2014 under the 100 threshold, at 99 in March, which suggests higher pessimism for the coming months. The year-on-year rate is also negative, currently standing at minus 0.6%. We expect that the negative trend will accelerate in the coming months as the impact of the COVID-19 on demand and consumption will be more visible. Considering that we have entered into the most serious economic crisis since 1929, it is likely that consumer confidence will collapse below its all-time low of 97.1 reached in early 2009.

Confidence in the manufacturing sector is also in free fall, but before the outbreak, initially as a result of the US-China trade war and the marked slowdown in global trade. The coronavirus is adding more uncertainty and economic difficulties on top of an already complicated situation. In March 2019, the index was at 100.2 (indicating optimism for the future) and it is now at 99.2 (indicating pessimism), which is its lowest point since Autumn 2009. The year-on-year rate is at minus 0.9%. It is bright clear the collapse is not going to stop anytime soon given the unusual economic conditions.

Disclaimer

Saxo Capital Markets (Australia) Pty Ltd prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Pty Ltd ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide and Product Disclosure Statement to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as CFDs and Margin FX products may result in your losses surpassing your initial deposits. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.
Please click here to view our full disclaimer.