Global economic growth outlook continues to be uncertain. Data regarding global growth remains mixed, said Barclays in a research report. The manufacturing PMIs for the month of July weakened a bit in the euro zone and the US; however, they continued to stay in expansionary territory. Meanwhile, China’s Caixin PMI rebounded, contradicting the wider NBS PMI fall of just below 50.
Manufacturing PMI of the UK dropped sharply, reflecting a Brexit-led worsening of the sentiment. The second quarter GDP data for the US surprised on the downside. Meanwhile, in the last week, the nation saw a bounce in vehicle sales and a firm better than expected employment report for July. This implies that private consumption in the US is expected to remain strong.
“Thus, while the gradual tightening in lending standards (senior loan officer opinion survey) and equities earnings outlook continues to be consistent with later stages of the business cycle, the risk of recession seem reduced”, added Barclays.
But the uncertainties in Europe appear large. There are political tensions emerging in the background: Spain is still not forming a government, worsening EU-Turkey relations are risking the refugee deal, and surveys indicate a renewed decline in Chancellor Merkel’s popularity in Germany, stated Barclays.
Given that the Brexit negotiations are still to begin, the upcoming referendum in Italy and important national elections to be held in 2017, political tensions might resurface solidly after the summer.
