There were plenty of economic data on Friday, all pointing in different directions.
Early in the day, Japan reported that industrial production rose 0.8 percent in August, maintaining its recovery from the March earthquake and tsunami. However, household spending fell 4.1 percent in August from a year earlier, worse than the 2.1 percent decline in July. Core consumer prices rose 0.2 percent in August while the jobless rate declined to 4.3 percent from 4.7 percent.
While Japan's industrial production rose in August, the manufacturing PMI fell to 49.3 in September from 51.9 in August, indicating that the recovery may have stalled.
HSBC's manufacturing PMI for China also came in below 50 in September but the final reading of 49.9 was the same as in August and higher than the flash estimate of 49.4.
In Europe, German retail sales slumped 2.9 percent in August, the biggest drop since May 2007, but French consumer spending on manufactured goods climbed 0.2 percent in August after declining 0.2 percent in July.
For the euro area as a whole, inflation accelerated to 3.0 percent in September from 2.5 percent in August while the unemployment rate stayed unchanged at 10.0 percent in August.
US data were also mixed. Consumer spending rose 0.2 percent, slowing from a 0.7 percent increase the prior month as income decreased 0.1 percent. Consumer spending was flat after taking into account a 0.2 percent rise in prices.
However, the Institute for Supply Management-Chicago's business barometer rose to 60.4 this month from 56.5 in August and the Thomson Reuters/University of Michigan index of consumer sentiment climbed to 59.4 from 55.7 in August.
Pockets of positive data notwithstanding, ECRI's Lakshman Achuthan sees a recession for the US economy. From Bloomberg:
“The U.S. economy is tipping into a new recession,” Achuthan, the group’s chief operations officer in New York, said in a radio interview today on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. “You have wildfire among the leading indicators across the board. Non-financial services plunging, manufacturing plunging, exports plunging. That is such a deadly combination.”
Investors may be thinking the same thing. Stocks fell sharply on Friday, led by a 2.5 percent fall in the S&P 500. The MSCI All-Country World Index fell 2.3 percent.