Is the global economy experiencing a Wile E. Coyote moment?

The latest PMI survey data indicate that, if mainland China is excluded, global growth retained encouraging resilience in May, says S&P Global in a report published last week.

It says, although losing some momentum, the global PMI’s output index excluding China remained indicative of annualized GDP of around 3.5%.

However, there’s a big question as to whether the global economy is experiencing something of a Wile. E Coyote moment, whereby the cartoon character defies gravity by running on air momentary having sped off a cliff, only to then plummet down.

The concerns rest on the fact that global manufacturing growth has weakened amid ongoing supply constraints and soaring prices, leaving growth reliant on the service sector.

Detailed PMI data in fact reveal how the main impetus to global growth is coming from a revival in spending on consumer-oriented services such as tourism and recreation, as many of the world’s largest economies reopen from Omicron related restrictions.

Key highlights the global economy report:

• Flash PMIs will be released towards the end of the week for the US, UK, eurozone, Japan and Australia. The surveys will offer a first look into worldwide economic conditions in June and will follow consumer price index (CPI) data for Hong Kong SAR, the UK, Canada, Singapore, Japan and Malaysia. Some key economic releases, such as eurozone, the US and India current accounts as well as the UK retail sales, are also lined up.

• May global PMI data indicated generally weaker economic performances amid the headwinds of lockdowns in mainland China and the Ukraine war, which stymied the boost from economies reopening from Omicron. Flash PMI data will indicate whether these slowdowns have become more entrenched, with eyes particularly focus on the US numbers for manufacturing and services, following the Fed’s 75 basis point rate hike. Supply performance will also be closely watched, given recent difficulties sourcing materials, as will the price gauges for signs of inflation hopefully peaking.

• Meanwhile in the UK, the latest Bank of England Monetary Policy meeting resulted in a fifth straight rate hike to 1.25%, its highest for 13 years. Policy makers will therefore be keeping a close eye on inflation data released mid-week while retail sales and consumer confidence will also be eagerly anticipated as households struggle under the weight of soaring energy bills and food prices.

• In addition for Europe, the flash PMI data for the eurozone, Germany and France are supplemented by construction output figures, and sentiment surveys.

• Elsewhere, in the APAC region the Bangko Sentral ng Pilipinas (BSP) is expected to hike interest rates again in the Philippines as inflation surges while activity growth continues (according to S&P Global Philippines PMI). Thailand manufacturing data will also become available towards the end of the week which should shed further light on the sectors performance amidst worsening price pressures and weak supply.

• This week’s special reports are on automobiles & auto parts PMI and ASEAN economic outlook.