The economic trend has not changed over the past month. PMI levels for the biggest economic areas continue to be above 50 (although only slightly over 50 for China, see chart 1), the level that divides growth from contraction. Despite the recent deceleration, the US economy remains solid, with an unemployment rate at its lowest level in nearly 7 years. The euro zone continues to have the best economic momentum. For the first time since January 2014, its PMI manufacturing surpassed its US equivalent (see chart 1), while the preliminary composite PMI also jumped to a near four-year high of 54.1, its 21st consecutive month above 50.

In March, the euro zone accentuated its improving trend with an economic surprises index rebounding at a high level. The single-currency area continues to clearly benefit from the depreciation of the Euro and the decrease in oil prices, in addition to supportive financial conditions. Despite a rebound in March, the G10 countries’ economic surprises index is globally decelerating, with the index slightly below 0.

We still expect the current environment to support the recovery of the euro zone in H1 2015. In the US, we expect the weakness to be temporary, mainly due to the harsh winter and the increase in the USD. Nonetheless, we notice that the fall in oil prices has not yet had the expected effect on consumption, as US consumers, for the moment, prefer to save rather than consume.

 

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