The economy is struggling a bit during the summer

Chinese industry surprises negatively, although retail turnover is positive. The Dutch consumer does not want to become more optimistic. A soft landing is expected for the United States, but the weaknesses are visible. The global economic picture is currently quite unclear. In fact, the picture is 'mixed' everywhere, which means that some figures are better than expected, others are against.

Take China. Industrial production growth disappointed in May. Growth fell from 6,7% year on year to 5,6%. But retail turnover was slightly lower than expected. With a year-on-year growth of 3,7% in June, they were better than the 2,3% growth in May, but that is of course not an impressive figure.

Or take our own country. This year there has been an improvement in purchasing power. Wage growth exceeds inflation. Yet consumers are not yet very enthusiastic. At least, not according to the CBS consumer confidence index. It fell a point in June, after having already fallen a point lower in May. The index is still well below the long-term average.

Or take the eurozone
The ZEW index, which measures analyst confidence, rose from 47,0 in May to 51,3 in June and the graph shows that this indicator is also at a high level from a historical perspective.

On the other hand, business confidence actually weakened in June. The Eurozone Purchasing Managers Index fell from 52,2 in May to 50,8 in June. There was a decline in both industry (45,6 in June, against 47,3 in May) and in the services sector (52,6 against 53,2). Europe compares poorly with other regions, especially in terms of industry. In the US, but also in Japan, the purchasing managers index in industry was above 50 in June. I think it is an indication that European industry has a structural problem: much higher energy prices than elsewhere.

Or take the US
Manufacturing production in the US increased by 0,9% in May compared to April. And most of the comments I read are quite enthusiastic. Last year, many economists feared a recession in the US. It didn't come. In fact, growth far exceeded expectations. Now economists are less pessimistic. The soft landing is by far the most popular scenario favored by forecasters. However, there are some weak spots that can be identified. Interest rates are 'biting' and the interest-rate-sensitive sectors are noticing this. Although house prices are still rising, the desire to buy is moderate and this is reflected in the confidence index among home builders.

What is also striking in the US is the development of the so-called 'Economic Surprise Index'. This measures on a daily basis whether macroeconomic figures are better or worse than expected. From the beginning of May, this index has been below zero, as the graph shows. This means that more setbacks are recorded than windfalls. Despite the increased confidence of many economists in the American economy, I do not find the figures very convincing.

Closing
I'm going on holiday and then to an economists' conference. It's hard to say what the global economy will be like when I get back. The picture is very mixed and that actually applies to all important blocks. Good luck and setbacks alternate. It's a bit of 'muddling through'. I don't see what will change that in the short term.

I'll be off the air for a few weeks. During July I hope to be able to write regular comments again, completely refreshed. Until then!

Hans de Jong

Han de Jong is a former chief economist at ABN Amro and now a resident economist at BNR Nieuwsradio, among others. His comments can also be found on Crystalcleareconomics.nl

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