ASR WSJ Newsflow
The ASR/WSJ Global Composite Newsflow Indicator (CNI) fell in December to 55.2, from 59.7 in November.
• The Global CNI experienced its second consecutive fall of more than 5pts in December. While the CNI has belatedly caught up with its coincident indicator, the Global Manufacturing PMI (Chart 1), the scale of the drop is still significant. The indicator has only fallen at such a rate over two months twice in its 28-year history.
• The drop has been broad-based, only the Labour Market indicator avoided falling for two consecutive months. And, as the dark red shading in Table 1 illustrates, many of the recent falls represent 2 standard deviation events.
• Of the six sub-components, the Global Economic indicator deserves a special mention. It fell to 26.2 in December, its lowest point for almost a decade, and the second biggest month-on-month drop since August 2007. At a regional level (charts available on request), weakness can be seen across all regions. But the fall in the US, where the strong economy has until recently been considered an outlier, is worrying.
• The Composite NewsFlow Indicator is not yet at a level consistent with a contraction in the global economy, but the developments of the past two months are concerning. Five of the CNI’s six sub-components fell for the second consecutive month. The Global Economic NewsFlow is now at its lowest level in nearly a decade. In a possible sign of relief, the direction of the Monetary Policy NewsFlow looks to have turned.
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