U.S. Global Supply Chain Managers Should Expect Stabilized Growth, Says IHS Markit

Supply chain managers should note that data from the world's largest economies suggest that the recent slump in growth may have bottomed out.

In March, the JPMorgan Global Composite Output Index (compiled by IHS Markit) rose 0.2 point to a four-month high of 52.8 in March, led by an acceleration in services output. Manufacturing growth remained sluggish, with export orders declining for a seventh consecutive month.

“Easing trade tensions and Chinese stimulus have likely helped to stabilize growth,” says Nariman Behravesh, Chief Economist, IHS Markit

Nevertheless, he cautions, a rebound in growth seems unlikely.

U.S. growth is slowing, as stimulus wears off. And China's stimulus is likely to remain modest. Meanwhile, world trade is still under threat. The U.S.-China negotiations have been dragging on, the Trump administration has not backed off from its threat to raise automobile tariffs, and the fate of the US-Mexico-Canada trade deal is still up in the air,” he says.

Sara Johnson, Executive Director, Global Economics, IHS Markit, adds that one troubling manifestation of this high level of uncertainty is the virtual halt in global capital expenditures—down from 6% in 2017. Political uncertainty in Europe has also been a factor.

“After expanding at 3.2% in 2018, global real GDP (at market exchange rates) is projected to increase 2.8% in both 2019 and 2020,” she says.

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