Developed world economies hit by slower growth and rising prices
The rate of growth of the world’s four largest developed economies deteriorated for a fourth month running in September, according to the flash PMIs. Growth slowed in the US, UK and Eurozone, while Japan remained in contraction for a fifth successive month. Price growth meanwhile accelerated to fall just shy of June’s all-time high in the 11-year series history as costs rose at an unprecedented rate, linked in turn to growing material shortages and supply chain constraints.
These divergent output and inflation paths present a growing headache for central banks, though clearer trends should soon emerge.
Developed world growth weakens
A weighted average of the output indices from the US, UK, Eurozone and Japanese flash PMI surveys showed business activity growing in September at the slowest rate since February. Across the four economies, manufacturing output growth slowed to the weakest seen over the past year while service sector growth hit the lowest since February.
Despite the falls, it should be noted that both sectors nevertheless remain in solid expansion territory, albeit with some marked variations around the world. Furthermore, the overall loss of momentum in September was the weakest seen over the past four months.
However, the PMI’s forward-looking indicators such as new orders and future expectations lost further ground, hinting that growth is likely to continue to moderate in coming months.