Global economy continues to lose momentum

Economic data last week indicated that the global economy as a whole continued to slow in recent months.

In the United States, data last week showed that its economy is probably still growing.

Retail sales there rose 0.9 percent in August, faster than the 0.6 percent gain in July. A 1.3 percent jump in auto sales, as well as higher gasoline prices, contributed to the increase.

However, excluding autos and gas, retail sales rose just 0.1 percent last month, well down from the 0.8 percent gain in July.

Nevertheless, a rise in the Thomson Reuters/University of Michigan consumer sentiment index to 79.2 in September from 74.3 in August suggests that US consumer spending remains resilient.

Worryingly, though, US exports fell 1.0 percent in July while industrial production fell 1.2 percent in August, the largest fall since March 2009. These data suggest that global economic weakness is having a negative impact on the US economy.

In contrast, in the crisis-stricken euro area, industrial production rebounded 0.6 percent in July after having fallen 0.6 percent in June.

Data for Japan last week were mixed.

Industrial production fell 1.0 percent in July after having risen 0.4 percent in June. Encouragingly, though, core machinery orders jumped 4.6 percent in July, just slightly less than the 5.6 percent increase in June.

Japan's services sector also provided mixed data. The Cabinet Office's economy watchers survey for August showed that its current conditions index fell to 43.6 last month from 44.2 in July while the future conditions index fell to 43.6 from 44.9. Both indices are at their lowest levels in more than a year.

However, the consumer confidence index, which had fallen in June and July, rebounded to 40.5 in August from 39.7 in July.

On the whole, though, last week's data were consistent with other recent data pointing to weak global economic growth.

Meanwhile, data from the Organisation for Economic Co-operation and Development suggest that the global economy is likely to continue to slow.

A report last week showed that the composite leading indicator for the OECD as a whole fell by 0.05 in July to 100.2. While the decline was small, it was the third consecutive decline in the indicator.

OECD composite leading indicators
	Ratio to trend, amplitude adjusted					Change from previous month
	2012					2012
	Mar	Apr	May	Jun	Jul	Mar	Apr	May	Jun	Jul
OECD area	100.4	100.4	100.3	100.3	100.2	0.04	0.00	-0.03	-0.05	-0.05
United States	100.9	101.0	100.9	100.9	100.8	0.08	0.01	-0.04	-0.06	-0.04
Euro area	99.7	99.7	99.6	99.5	99.4	-0.04	-0.06	-0.08	-0.10	-0.09
Japan	100.8	100.8	100.7	100.5	100.4	0.01	-0.06	-0.12	-0.15	-0.15

According to the OECD, the CLIs of the major economies show that the “loss of momentum is likely to persist in the coming quarters”.