In the aftermath of a long credit-driven boom, it would not be surprising to see turmoil in financial markets, slowing real growth and temporarily rising inflation. The crucial questions at the present juncture have to do with the severity of these individual trends as they now appear and how they might interact. While difficult to predict, their interaction does appear to point to a deeper and more protracted global downturn than the consensus view seems to expect...
A downturn is certainly what the global economy appears to be facing, although it has not generally turned out as bad as some feared.
Bloomberg reports the latest Tankan survey from Japan.
Confidence among Japan's largest manufacturers fell less than economists estimated, signaling that the nation's exporters expect to withstand the U.S. slowdown and rising raw-materials costs.
The Tankan index of manufacturer sentiment slid to 5 points in June from 11 in March, a third quarterly decline, the Bank of Japan said today in Tokyo. The median estimate of 32 economists surveyed by Bloomberg was for a drop to 3 points.
Large companies said they plan to increase capital spending 2.4 percent this fiscal year, after saying they would cut investment three months ago. Exporters are turning to Asia and oil-producing nations amid waning sales in the U.S., the nation's largest market. That demand is easing the impact that record commodities costs have on corporate profits at home.
Other recent data largely corroborate the weak trend in Japan. The Nomura/JMMA Japan Purchasing Managers Index declined to 46.5 in June, a 6-year low, from 47.7 in May. May housing starts fell 6.5 percent from the previous year.
In the US, the Chicago PMI did manage to climb to 49.6 in June from 49.1 in May.
Meanwhile, in the euro area, inflation is still accelerating, rising to 4 percent in June, the highest in more than 16 years, from 3.7 percent in May.