Advanced Economies: Mixed picture but neither growth nor inflation is satisfactory - NAB

Research Team at NAB, notes that the moderate growth has continued into the second half of the year in the big advanced economies.

Key Quotes

“US quarterly economic growth doubled from 0.35% in June to 0.7% in September, boosted by a temporary surge in exports. The UK economy has fared better than expected in the wake of the Brexit vote, growing by 0.5% in the third quarter – much the same pace of growth as averaged over the previous year. The first estimates of Japanese economic growth will be released in mid-November. After taking out the effect of natural disasters, the Canadian economy is growing at a moderate pace with quarterly expansion of 0.6% in March and 0.1% in June. Growth since then has been boosted by recovery from the impact of forest fires on the important energy sector.

Euro-zone quarterly growth has been more disappointing, after running at 0.5% through late 2015 and early 2016 it slowed to 0.3% in the June quarter and stayed around that pace in the September quarter. There has been quite a difference in growth between the various Euro-zone member countries with Italy’s economy being considerably smaller than it was in early 2008 and the country faces a referendum in December that has been portrayed as a measure of support for the Government.

Recent trends in the monthly business surveys, trade volumes and industrial output suggest that conditions have started to improve in the big advanced economies. Industrial output fell by 0.2% in the second quarter but it has improved since then with production up by 0.3% in the 3 months ended August. Better industrial conditions in Japan and the Euro-zone account for most of that improvement. Following a long weak period, international trade volumes have also improved in the advanced economies with modest growth in both exports and imports in the 3 months to August.

The business surveys are consistent with moderate growth continuing through to October with an upturn in the industrial sector and ongoing solid growth in the services sector – which represents the bulk of these economies.”