The Sales Managers Index: Global

The First Data on Economic Activity Levels in the World’s Biggest Economies - Every Month
Released: 22 March 2020

Global Growth Halted

World Economy Mired In Recession

The fall in economic growth is likely to worsen in Q2

The main contributors to global growth in recent years have been, in order of importance, China, USA, India, Eurozone, and Japan. All are now in recession or moving rapidly towards a fall in economic activity.

China - by far the world’s biggest economic growth engine - is in recession.
China accounted for approximately 35% of global growth over the past 3 years. February and March Sales Managers survey data for China showed a dramatic shrinkage of economic activity (since confirmed by other data). Chinese Q1 growth is very likely to be negative, and Q2, although likely to show some recovery (March data is encouraging in that respect) is most unlikely to produce the sort of growth numbers seen in recent years.

USA, the second biggest contributor to global growth, is also in recession.
The USA has accounted for just under 18% of global growth in recent years, but the latest US Sales Managers Index numbers suggest the economy shrank dramatically in March. The Headline Sales Managers Index and sub indexes covering Market Growth, Profits, and Business Confidence are all at all-time lows. Given the increasing impact of the Coronavirus, Q2 growth is unlikely to continue to contribute to global growth.

Indian economy in deep trouble before possible Coronavirus damage.
India has been the third major engine of global growth, accounting for almost 9% in recent years. This is unlikely to have been sustained in Q1 2020. The Indian Sales Managers Sales Growth Indexes have all been on a declining trend for over 5 years, and February and March Indexes confirm the decline towards recession. India’s previously rapid growth has slowed dramatically in recent months, and may be much lower than suggested by poor quality official data. And since India has not been affected badly by the Coronavirus as yet (or its poor public health systems have not registered the impact), the potential for further disruption on a major scale remains a high probability.

Eurozone very close to recession in Q4 2019 before the impact of Coronavirus.
The EU accounts for a bigger slice of global GDP than the US (22.8% as against 21.4% for the US in PPP terms) but has contributed less than 10% of global economic growth recently. Furthermore the rate of growth in the key Eurozone area has slowed to the lowest level since the bloc’s debt crisis 7 years ago. Q4 2019 Eurozone growth was a meagre 0.1%. Given the severe Coronavirus problems in Italy and mounting problems in Spain, France and elsewhere, Europe is very likely to record a serious fall in economic activity in both Q1 and Q2.

Japanese GDP shrank dramatically in Q4 2019, and is likely to have experienced a further Q1 fall.
Japan has the world’s fifth biggest economy (counting the EU as a country) but is very unlikely to contribute to global growth in Q1 or Q2 2020. Japan's GDP shank by 6.3% in Q4 (annualised) as a result of misjudged tax rises, and this before the impact of Coronavirus problems in China and fears of Coronavirus in Japan itself became a factor.

Global Staffing Levels Index

The Staffing Levels Index monitors the level of growth or decline in employment against the same period a year earlier.

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About World Economics

World Economics is an organisation dedicated to producing analysis, insight and data relating to questions of importance in understanding the world economy. Its parent company Information Sciences Ltd has a long history of the development of key business information today used throughout the world, including the origination and development of the Purchasing Managers Indexes in China, Japan , India, Europe, America and the UK (now owned by IHS Markit), and the development of WARC a global information provider for major corporations (now owned by Ascential).

Currently our primary research objective is to encourage and assist the development of better and faster measures of economic activity. In cases where we believe we can contribute directly, as opposed to through highlighting the work of others, we are producing our own measures of economic activity.

Our work is mainly of interest to investors, organisations and individuals in the financial sector and to significant corporations with global operations, as well as governments and academic economists.

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