Global economy gives no hint of recession at start of 2012

Last week's data showed that the global economy picked up pace at the start of the year, making a recession in early 2012 look very unlikely.

Surveys of purchasing managers around the world showed improvements in economic activity in most countries.

In the United States, the purchasing managers indices for both manufacturing and services rose further above the 50 mark that separates expansion from contraction. The Institute for Supply Management's manufacturing PMI rose to 54.1 in January from 53.1 in December while the non-manufacturing index jumped to 56.8 from 53.0.

In the euro area, the composite index from Markit Economics rose above the 50 mark for the first time in five months in January. It increased to 50.4 from 48.3 in December after the services index rose to 50.4 from 48.8. The manufacturing index also improved to 48.8 in January from 46.9 in December.

In Japan, Markit's composite output index rose to 51.1 in January from 50.1 in December. The Markit/JMMA manufacturing PMI rose to 50.7 in January from 50.2 in December while Markit's services business activity index rose to 51.0 from 50.4.

The worldwide improvement in purchasing managers indices pushed the JPMorgan global all-industry output index up for the third consecutive month to 54.6 in January from 52.7 in December. The new orders index jumped to 54.0 from 51.5.

JPMorgan Global All-Industry Indices
	December	January
Output	52.7	54.6
New orders	51.5	54.0
Input prices	56.2	56.7
Employment	50.3	52.6

Continued economic growth in the US at the start of 2012 was also signalled by the employment report released on Friday. The report showed that nonfarm payrolls increased by 243,000 in January, the fastest pace in nine months. The unemployment rate fell to 8.3 percent, the lowest since February 2009, from 8.5 percent in December.

Even the eurozone economy may be able to avoid a recession. In his commentary on the purchasing managers' data, Markit's chief economist Chris Williamson said that the January data indicated that business conditions have stabilised and that “a more definitive return to growth is possible in February”.