Surveys of managers in the manufacturing sector in Europe and Asia continue to be positive, suggesting the possibility of continuing synchronized global growth in the coming year as well. The strong growth of the economy, together with other factors, has sent equity markets to new historical highs almost all over the world.
Last year, we saw an unexpected increase in the euro area, and 10 years should be overtaken until 2018 despite the expected end of quantitative easing. This program should officially end in September, although there is a prediction that it will be prolonged due to low inflation in the European block.
PMI Purchasing Manager Survey for January ended at 59.6, slightly below 60.6 in December. This level represented 20 annual maximums since these management surveys began to be prepared.
The European economy has risen to full strength and there is nothing to threaten it yet. February is likely to be a strong month for European factories and new orders grow so fast that companies will not and will have to raise prices.
Britain remains the weakest member in Europe. PMI in the manufacturing sector rose from 56.2 to 55.3 in January, the lowest level since June, and the UK economy is still losing momentum.
According to estimates, Britain’s economy should grow only half the rate of performance of the US economy and one percent less than expected economic growth in the euro area. There are still a number of problems in Britain, for example, high inflation, political uncertainty, pessimism of managers and CEOs of large companies.
In Japan, we have seen the PMI rise to four-year high and the positive mood continues. Japanese yen is starting to strengthen, which may be negative signal for Japanese stocks.
China, despite the effort to reduce debt, is seeing the relative resilience of the manufacturing sector. But Chinese stocks have already begun by correcting their last profits. The PMI ended in January at 51.5, which was exactly the level of December, but slightly above the analysts’ estimates.
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