aug 04 danske global bcm aug 2010
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Investment ResearchGeneral Market Conditions
Summary and outlook
Global leading indicators continued to decline in July showing further signs of slowinggrowth in H2. Especially, China is coming to a halt but US indicators also point to a more
front-loaded slowdown. Europe has been the positive surprise with Germany looking
strong. Commodity prices have recovered somewhat but overall still point to a slowdown.
The Baltic Dry index is slightly higher but overall still at a low level.
Indicators suggest a more front-loaded slowdown than expected. This is probably aconsequence of the European debt crisis from spring and a stronger impact from Chinese
tightening measures than previously expected.
We expect a further gradual slowdown of leading indicators in H2 and there is a rising riskthat global growth could slip below potential growth towards the end of the year. This
points to continued high market volatility and downward pressure on bond yields as
declining leading indicators will spur fears of a double-dip.
Details
Global PMI new orders fell again in July to 54.0 from 55.7 in June. This was the thirdconsecutive decline. However, the figures still point to growth slightly above trend.
In the US, ISM fell again in July to 55.5. Our ISM model points to a broadly flat reading inthe coming months and we expect it to reach 53-54 by year-end.
Euroland delivered the only positive surprise as both PMI and the German ifo point torobust growth. German factory orders also paint an upbeat picture. However, some of the
more forward-looking indicators could be a warning of slowing ahead. OECDs leading
indicator, the PMI order-inventory balance and German ZEW have come well off the
peaks. Scandi leading indicators are slightly softer but generally point to decent growth
rates.
Asia is showing signs of slowing growth. Chinese PMI has shown the biggest deteriorationwith PMI new orders falling further below 50. Japanese industrial production has also
stagnated after several quarters of sharp increases. CEE indicators continue to indicate
strong growth rates, but some signs of slowdowns are also emerging. Activity in Brazil
has stagnated a bit as both PMI and industrial production are weakening.
Global PMI and OECD leading indicator PMI new orders manufacturing
00 02 04 06 08 10
20
30
40
50
60
70
20
30
40
50
60
70
Euroland
China
Index IndexUSA
Source: Markit and Reuters Ecowin Source: Markit and Reuters Ecowin
Note: OECD+6 is OECD plus 6 largest emerging markets
4 August 2010
MonitorGlobal: Business Cycle Monitor
Key leading indicators to watch
German factory orders: Aug 5 OECD lead. indicators: Aug 6 German ZEW: Aug 17
German ifo: Aug 17 Euro flash PMI: Aug 25 US ISM / Global PMI: Sep 1
Chief Analyst
Allan von Mehren
+45 45 12 80 55
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US
Danske Markets ISM model Order-inventory balance vs. ISM
98 99 00 01 02 03 04 05 06 07 08 09 10 11
30
35
40
45
50
55
60
65
30
35
40
45
50
55
60
65 Index Index
ISM
Model +6months ( 1987-present)
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
30
35
40
45
50
55
60
65
70
75
30
35
40
45
50
55
60
65
70
75 Index Index
ISM new orders lessinventories, standardized
ISM manufacturing
Source: Reuters Ecowin Source: Reuters Ecowin
Inventory demand ratio vs. ISM Leading indicator vs. manufacturing production
98 99 00 01 02 03 04 05 06 07 08 09 10
30
40
50
60
70
80
-10
-5
0
5
10
15 3 mth chg., % AR Index
ISM >>
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UK and Switzerland
UK: PMI on sectors UK: Industrial orders vs. leading indicators
98 99 00 01 02 03 04 05 06 07 08 09 10
-5
-4
-3
-2
-1
0
1
2
3
4
-5
-4
-3
-2
-1
0
1
2
3
4
US ISM, new ord
Standardised Standardised
UK PMI manufacturing
UK PMI service
98 99 00 01 02 03 04 05 06 07 08 09 10
-75
-63
-50
-38
-25
-13
0
13
25
-20
-15
-10
-5
0
510
15
20% 1m, AR Net bal
CBI industrial orders >>
98 99 00 01 02 03 04 05 06 07 08 09 10
-15
-10
-5
0
5
10
15
90.0
92.5
95.0
97.5
100.0
102.5
105.0 Index % y/y
>
Source: Reuters Ecowin Source: Reuters Ecowin
ScandinaviaDenmark: Manufacturing confidence vs GDP Denmark: Confidence indicators
Source: Reuters Ecowin Source: Reuters Ecowin
Norway: PMI vs industrial production Norway: Manufacturing production vs. confidence
Source: Markit and Reuters Ecowin Source: Reuters Ecowin
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Sweden: IP vs business surveys Sweden: Leading indicator vs. activity index
00 01 02 03 04 05 06 07 08 09 10
-35
-30
-25
-20-15
-10
-5
0
5
10
-7
-5
-3
-1
1
3
IP ex energy >>
Standardised % 6m/6m, AR
Source: Reuters Ecowin Source: Reuters Ecowin
CEE/CIS
CEE: Manufacturing PMI orders CEE: Industrial production
00 01 02 03 04 05 06 07 08 09 10
20
30
40
50
60
70
20
30
40
50
60
70
Hungary
Index Index
Czech Republic
Poland
98 99 00 01 02 03 04 05 06 07 08 09 10
-30
-20
-10
0
10
20
30
-30
-20
-10
0
10
20
30
Czech Republic
% y/y (3MA) % y/y (3MA)Poland
Hungary
Source: Markit and Reuters Ecowin Source: Reuters Ecowin
Russia: PMI vs. industrial production Ukraine: Industrial production
98 99 00 01 02 03 04 05 06 07 08 09 10
-25
-20
-15
-10
-5
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
Industrial production, Russia >>
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China
Industrial production vs. PMI Leading indicator vs. industrial production
00 01 02 03 04 05 06 07 08 09 10
0.0
5.0
10.0
15.0
20.0
25.0
96
98
100
102
104
106Industrial production>>
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Other Asia
Asia: Industrial production South Korea: Industrial production vs. exports
00 01 02 03 04 05 06 07 08 09 10
40.0
45.0
50.0
55.0
60.0
65.0
-8
-3
3
8
13
18
23
28
>
% y/y Index
00 01 02 03 04 05 06 07 08 09 10
-60
-40
-20
0
20
40
-17.5
-12.5
-7.5
-2.5
2.57.5
12.5 % 3m/3m % 3m/3m
>
Source: Reuters Ecowin Source: Reuters Ecowin
Taiwan: Industrial production vs. exports Thailand: Industrial production and export
00 01 02 03 04 05 06 07 08 09 10
-30
-20
-10
0
10
20
-30
-20
-10
0
10
20 % 3m/3m % 3m/3m
Industrial production
Exports
06 07 08 09 10
90
100
110
120
130
140
90
100
110
120
130
140Jan. 2006 = 100
Industrial production
Exports
Source: Reuters Ecowin Source: Reuters Ecowin
LATAM and CommoditiesBrazil: Industrial production Mexico: Industrial production vs. PMI
Source: Reuters Ecowin Source: Reuters Ecowin
Baltic Dry freight index and metal prices CRB metals vs. industrial production
Source: Reuters Ecowin Source: Reuters Ecowin
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