Economic Data Provides a Mixed View of the Economy
Economic data over the last month is providing a mixed view of the economy per IPC’s February Economic Outlook report.
“On one hand, economic fundamentals continue to slow,” said Shawn DuBravac, IPC chief economist. “However, despite aggregate softness, certain segments continue to do well. For example, the defense and space equipment sector hit another new high in January, aerospace is up significantly from pre-pandemic levels and other sectors key to the electronics industry are holding up well.”
The report also shows that manufacturing sectors in Europe, the U.S., and China are all signaling contraction according to their respective PMI indexes, but in China and Europe at least, things are looking less bad this month. Despite signs of slowing demand, manufacturers continue to hire. “The broader economy added more than 500,000 new jobs, a shocking number in the midst of what many believe is the start of a recession,” added DuBravac.
Additional data in report show:
- U.S. manufacturing sentiment contracted for a third consecutive month, falling from 48.4 to 47.4 in January.
- U.S. industrial production was unchanged in January but was noticeably weaker than the expected 0.5 percent increase. The manufacturing sector improved 1 percent in January, but prior months were revised downward leaving the headline index lower than previously believed. Industrial production has likely peaked, despite January’s rise.
- The S&P Global Eurozone Manufacturing PMI moved higher in January, rising from 47.8 to 48.8. The index hit a five-month high but remains in contractionary territory.
- EU electronics manufacturing output fell in December after a one month increase in November. Output declined 1.4 percent (month-on-month) and is down 0.9 percent over the last year.
- Despite indications that the global economy continues to slow, economists have marginally raised forecasts for economic growth in the U.S., Europe, and China for 2023.