Head of Macro Analysis
Weather and data seasonality have recently been used to explain poor economic data in developed economies. Such arguments do not stand up to careful scrutiny.
The real issue is linked to an ongoing global trade slowdown resulting from higher protectionism (exemplified by the US' implementation of tariffs on March 23) and a negative China credit impulse.
The RWI/ISL Container Throughput index has been falling year-on-year since Q1.
As we are all aware, South Korea is a good proxy for global trade. South Korean industrial production correlates well with global industrial production (excluding the US) and leads the latter by four months.
South Korean industrial production is now down (y/y) which indicates that we should expect global trade growth to slow in the coming months.
Another key driver is contraction in China Credit Impulse (running at 2% of GDP). It leads global manufacturing PMI by 12 months. There is little doubt now that the Goldilocks era is definitively done.