Global economy still growing despite relapse in euro area

Economic data released over the past two weeks mostly reinforced the view that growth in the global economy generally held up in early 2012 although the eurozone economy failed to show further improvement.

In the United States, the employment report last Friday showed that nonfarm payrolls increased by 227,000 in February. This followed increases of 223,000 and 284,000 in December and January respectively, thus maintaining a positive trend in employment growth. The unemployment rate was unchanged at 8.3 percent, which is the lowest since February 2009.

Also, US February purchasing managers indices for both manufacturing and services stayed above the 50 mark that separates expansion from contraction. The Institute for Supply Management's manufacturing PMI fell to 52.4 in February from 54.1 in January but the non-manufacturing index rose to 57.3 from 56.8.

Meanwhile, in Japan, Markit's composite output index rose slightly to 51.2 in February from 51.1 in January. The Markit/JMMA manufacturing PMI slipped to 50.5 in February from 50.7 in January but Markit's services business activity index rose to 51.2 from 51.0.

Other economic data from Japan were also mostly positive. The index of coincident economic indicators slipped to 93.1 in January from 93.6 in December but the index of leading economic indicators rose to 94.9 from 93.8. The economy watchers survey showed that the current conditions index rose to 45.9 in February from 44.1 in January while the future conditions index rose to 50.1 in February, the highest since April 2007, from 47.1 in January.

Among the major developed economies, the eurozone economy is the laggard based on recent data. After having risen above the 50 mark for the first time in five months in January, Markit's composite index for the region was back below it in February, falling to 49.3 from 50.4 in January. The services index fell to 48.8 from 50.4 but the manufacturing index improved to 49.0 in February from 48.8 in January.

Despite the weakness in the euro area, the JPMorgan global all-industry output index increased for the fourth consecutive month to 55.5 in February, the highest level in a year, from 54.5 in January.

JPMorgan Global All-Industry Indices
	January	February
Output	54.5	55.5
New orders	54.0	54.7
Input prices	56.8	59.4
Employment	52.6	52.2