Economic growth revives in Feb, outlook darkens amid war: IHS Markit

Though price pressures remained elevated, linked to ongoing supply constraints and rising energy prices, business optimism rose to the highest recorded for a decade as firms looked to better times ahead with the pandemic's disruptions continuing to wane, the company, which is part of S&P Global, said in a release.

However, Russia's invasion of Ukraine has since changed the economic landscape, posing downside risks to economic growth—notably in Europe—and driving inflationary pressures higher via higher energy and other commodity prices, whilst also disrupting supply chains, it said.

The global economy expanded for a twentieth straight month in February, according to the JPMorgan global purchasing managers’ index (PMI) compiled by IHS Markit, with the rate of expansion accelerating from January's 18-month low as the omicron wave showed signs of easing.

The PMI rose from 51.1 to 53.4, a level broadly indicative of global GDP growing at an annualised rate of just over 3 per cent in February after 2 per cent growth was indicated in January.

Both manufacturing and services growth improved in February, the latter recording the steeper acceleration and reflecting the loosening of pandemic containment measures globally after two months of tightening.

The United Kingdom led the major developed economies, with business activity growth surging in February as COVID-19 restrictions were almost entirely withdrawn. Less comprehensive easing of containment measures in the eurozone and the United States also led to faster growth after omicron related slowdowns in January.

While UK growth hit the highest since last June, with the composite PMI up to 59.9 from 54.2 in January, US growth rebounded to the highest since December—an output index of 55.9 against 51.1 in January—while the eurozone saw the fastest growth since last September, with the PMI recovering from 52.3 in January to 55.5.

In contrast, Japan's PMI fell from 49.9 to 45.8 to indicate the steepest decline since last August as containment measures were tightened again.

Looking at the major emerging markets, India and Brazil reported similar rates of expansion with growth accelerating in both cases to result in composite PMI readings of 53.5.

However, while India's expansion was led by stronger manufacturing, helping to offset ongoing modest services growth, the reverse was evident in Brazil, where a fifth monthly decline in manufacturing was offset by resurgent services growth, IHS Markit said.

China, pursuing a 'zero-COVID' policy, broadly stagnated for a second successive month amid increased health restrictions, its composite PMI holding at 50.1 due to a stagnation of both goods and services output. Russia, its PMI at 50.8, was also more or less stalled, as resurgent service sector growth was offset by a renewed manufacturing decline.

Supply shortages meanwhile exerted sustained, albeit slightly reduced, upward pressure on raw material input costs. However, combined with upward pressure on wages as firms sought to attract and retain workers and soaring energy bills, the raw material price increases led for a renewed upturn in global factory selling price inflation.

ALCHEMPro News Desk (DS)