The document summarizes global economic data for May 2013. It found that global economic growth slowed in the second quarter, with manufacturing and service sector growth weakening. The US saw the strongest growth among developed economies while the eurozone continued to contract. Growth also slowed in major emerging markets like China, India, and Russia. Central banks maintained accommodative monetary policies despite some signs of improvement in certain economies.

1. The Science of FinanceThe Science of Finance
Monthly economic overviewMonthly economic overview
GMay 2013: Global economy sees subdued start to second quarter

2. Monthly economic overviewMonthly economic overview
Global economic growth slips to six-month low
Having held up well in Q1 to signal a rate of global GDP growth that was much improved on the threeHaving held up well in Q1 to signal a rate of global GDP growth that was much improved on the three--year low of 1.4%year low of 1.4%
seen in Q4 the global PMI dropped to a sixseen in Q4 the global PMI dropped to a six month low in April to indicate a subdued start to Q2 Worldwide goods exportmonth low in April to indicate a subdued start to Q2 Worldwide goods exportseen in Q4, the global PMI dropped to a sixseen in Q4, the global PMI dropped to a six--month low in April to indicate a subdued start to Q2. Worldwide goods exportmonth low in April to indicate a subdued start to Q2. Worldwide goods export
volumes have risen over the past two months, but manufacturing growth remains disappointingly weak andvolumes have risen over the past two months, but manufacturing growth remains disappointingly weak and easedeased in April.in April.
Meanwhile, subdued demand in many countries caused growth of service sector activity to slow to the weakest for tenMeanwhile, subdued demand in many countries caused growth of service sector activity to slow to the weakest for ten
monthsmonthsmonths.months.
Global PMI and economic growthGlobal PMI and economic growth Global tradeGlobal trade
GDP annual % changePMI Global PMI Manu. Exports Index Global Manufacturing Exports y/y%
60
65
5.0%
7.0%
GDP annual % changePMI
57
62
20%
30%
p g p y y
50
55
1.0%
3.0%
42
47
52
10%
0%
10%
35
40
45
-5 0%
-3.0%
-1.0%
Global PMI Output Index
Global GDP
32
37
42
30%
-20%
-10%
PMI Exports Index
Global exports
2
35
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13
-5.0% 32
'98 '00 '02 '04 '06 '08 '10 '12
-30%

3. Monthly economic overviewMonthly economic overview
Among the major developed countries, the US continued toAmong the major developed countries, the US continued to
US leads developed world economic expansion, while the eurozone floundersUS leads developed world economic expansion, while the eurozone flounders
65
PMI Output Index (manufacturing & services)
see the strongest pace of growth, despite the rate havingsee the strongest pace of growth, despite the rate having
slowed sharply compared with the start of the year.slowed sharply compared with the start of the year.
55
60
65
Growth also eased in Japan, though remains in recoveryGrowth also eased in Japan, though remains in recovery
mode compared to the stagnation seen in the fourth quarter.mode compared to the stagnation seen in the fourth quarter.
50
55
p g qp g q
Growth in the UK meanwhile improved to register theGrowth in the UK meanwhile improved to register the
t t t i th Ol it t t i th Ol i l t d b t l tl t d b t l t
40
45
UK
Eurozone
strongest upturn since the Olympicsstrongest upturn since the Olympics--related boost lastrelated boost last
August.August.
30
35
2008 2009 2010 2011 2012 2013
US
Japan
Developed world PMIsDeveloped world PMIs
In contrast, an ongoing deep recession continued to beIn contrast, an ongoing deep recession continued to be
recorded in the eurozone.recorded in the eurozone.
2008 2009 2010 2011 2012 2013
3

4. Monthly economic overviewMonthly economic overview
Measured across all emerging markets covered by the PMIs,Measured across all emerging markets covered by the PMIs,
Signs of stalling growth evident across the largest emerging marketsSigns of stalling growth evident across the largest emerging markets
65
PMI Output Index (manufacturing & services)
output rose at the slowest rate since September 2011,output rose at the slowest rate since September 2011,
registering the secondregistering the second--weakest performance seen in the lastweakest performance seen in the last
55
60
four years.four years.
Growth slowed to a sixGrowth slowed to a six--month low in China, while rates ofmonth low in China, while rates of
50
55
expansion were the weakest for a yearexpansion were the weakest for a year--andand--aa--half in Indiahalf in India
and Russia. Brazil was the only BRIC economy to registerand Russia. Brazil was the only BRIC economy to register40
45
China
India
Brazil
faster growth in April, but even there the pace of expansionfaster growth in April, but even there the pace of expansion
remained weak.remained weak.
30
35
2008 2009 2010 2011 2012 2013
Brazil
Russia
Emerging market PMIsEmerging market PMIs
Worryingly, stalling or weakened service sector growth pointsWorryingly, stalling or weakened service sector growth points
to a lack of growth of domestic demand in the world’s biggestto a lack of growth of domestic demand in the world’s biggest
2008 2009 2010 2011 2012 2013
4
emerging markets.emerging markets.

5. Monthly economic overviewMonthly economic overview
S Korea tops manufacturing rankings, while France displaces Greece at bottom
South Korea pushed the US into second place at the head of the manufacturing PMIs league table in April. Japan wasSouth Korea pushed the US into second place at the head of the manufacturing PMIs league table in April. Japan was
also a notable climber up the table up from 12th to 6th place France meanwhile displaced Greece at the foot of the tablealso a notable climber up the table up from 12th to 6th place France meanwhile displaced Greece at the foot of the tablealso a notable climber up the table, up from 12th to 6th place. France meanwhile displaced Greece at the foot of the table,also a notable climber up the table, up from 12th to 6th place. France meanwhile displaced Greece at the foot of the table,
and Germany slid further down. In terms of manufacturing exports, the growth rankings were led by the UK for the firstand Germany slid further down. In terms of manufacturing exports, the growth rankings were led by the UK for the first
time in the global PMI series history, followed by South Korea and Japan.time in the global PMI series history, followed by South Korea and Japan.
55
March
April
Manufacturing PMI
50
45
40
Fran
Spa
Gre
Italy
Pola
Aus
Irela
Ger
Net
Den
Cze
UK
Can
Swi
Chin
WO
Sou
Rus
Taiw
Braz
Viet
Indi
Jap
Turk
Indo
Mex
US
SK
5
nce
ain
ece
y
and
stria
and
rmany
herlands
nmark
echRep.
nada
tzerland
na
ORLD
uthAfrica
ssia
wan
zil
tnam
a
an
key
onesia
xico
Korea

6. Monthly economic overviewMonthly economic overview
No end in sight to Fed stimulus despite better-than-expected jobs data
US GDP grew at an annualised rate of 2.5% in Q1, up from 0.4% in Q4, but after allowing for inventories the pace slowedUS GDP grew at an annualised rate of 2.5% in Q1, up from 0.4% in Q4, but after allowing for inventories the pace slowed
from 1 9% to 1 5% Surveys suggest this slowdown persisted into Q2 with the allfrom 1 9% to 1 5% Surveys suggest this slowdown persisted into Q2 with the all sector PMI (based on both Markit andsector PMI (based on both Markit andfrom 1.9% to 1.5%. Surveys suggest this slowdown persisted into Q2, with the allfrom 1.9% to 1.5%. Surveys suggest this slowdown persisted into Q2, with the all--sector PMI (based on both Markit andsector PMI (based on both Markit and
ISM data) hitting a tenISM data) hitting a ten--month low in April. Employment growth was meanwhile strongermonth low in April. Employment growth was meanwhile stronger--thanthan--expected, driving the joblessexpected, driving the jobless
rate down to its lowest since 2008. However, the rate of job creation is unlikely to encourage the Fed to start withdrawingrate down to its lowest since 2008. However, the rate of job creation is unlikely to encourage the Fed to start withdrawing
stimulus any time soon given the weak activity datastimulus any time soon given the weak activity datastimulus any time soon, given the weak activity data.stimulus any time soon, given the weak activity data.
USUS PMI and economic growthPMI and economic growth US nonUS non--farm payrolls and unemploymentfarm payrolls and unemployment
Composite PMI GDP q/q% Unemployment rate (%) Monthly change in payrolls (thousands)
57
62
67
0.5
1.0
1.5
Composite PMI GDP, q/q%
9
10
11
200
400
600
Unemployment rate (%) Monthly change in payrolls (thousands)
47
52
57
1 0
-0.5
0.0
7
8
9
400
-200
0
37
42
-2.0
-1.5
-1.0
GDP
PMI
5
6
-800
-600
-400
Monthly payrolls change
Unemployment
6
32
2006 2007 2008 2009 2010 2011 2012 2013
-2.5 4
2008 2009 2010 2011 2012 2013
-1000

7. Monthly economic overviewMonthly economic overview
Japan’s policymakers rewarded with growth upturn and rising price pressures
Japan’s PMIs showed growth easing from March’s jointJapan’s PMIs showed growth easing from March’s joint--record high, but the pace of expansion remained consistent withrecord high, but the pace of expansion remained consistent with
over 1% quarterly growth in GDP Companies reported that improved confidence arising from recent stimulus packagesover 1% quarterly growth in GDP Companies reported that improved confidence arising from recent stimulus packagesover 1% quarterly growth in GDP. Companies reported that improved confidence arising from recent stimulus packagesover 1% quarterly growth in GDP. Companies reported that improved confidence arising from recent stimulus packages
and export gains from the weaker yen have helped revive growth. There were also promising signs in the fight againstand export gains from the weaker yen have helped revive growth. There were also promising signs in the fight against
deflation. Manufacturers’ input costs rose at the fastest rate for over a yeardeflation. Manufacturers’ input costs rose at the fastest rate for over a year--andand--aa--half, and service sector costs showedhalf, and service sector costs showed
one of the strongest increases since 2008one of the strongest increases since 2008one of the strongest increases since 2008.one of the strongest increases since 2008.
JapanJapan PMI and economic growthPMI and economic growth Japanese input pricesJapanese input prices
Markit Japan Composite PMI Japan GDP q/q% PMI Input Costs Index
52
57
1.0
2.0
3.0
Markit Japan Composite PMI Japan GDP, q/q%
70
75
80
Manufacturing
Services
PMI Input Costs Index
42
47
-2.0
-1.0
0.0
55
60
65
32
37
-5.0
-4.0
-3.0
GDP
PMI 40
45
50
7
27
2006 2007 2008 2009 2010 2011 2012 2013
-6.0 35
2008 2009 2010 2011 2012 2013

8. Monthly economic overviewMonthly economic overview
Euro area recession continues, with renewed downturn in Germany
The Eurozone PMI rose slightly in April, but the surveys continued to indicate a strong pace of economic contraction.The Eurozone PMI rose slightly in April, but the surveys continued to indicate a strong pace of economic contraction.
Weakness is spreading across the region with steep downturns in France Italy and Spain now joined by a renewedWeakness is spreading across the region with steep downturns in France Italy and Spain now joined by a renewedWeakness is spreading across the region, with steep downturns in France, Italy and Spain now joined by a renewedWeakness is spreading across the region, with steep downturns in France, Italy and Spain now joined by a renewed
downturn in Germany, where output fell for the first time since last November. The ECB reacted to the ongoing recessiondownturn in Germany, where output fell for the first time since last November. The ECB reacted to the ongoing recession
by trimming its main policy rate to an allby trimming its main policy rate to an all--time low of 0.5%, though few expect the cut to have a material impact.time low of 0.5%, though few expect the cut to have a material impact.
EurozoneEurozone PMI and economic growthPMI and economic growth Output by countryOutput by country
Markit Eurozone Composite PMI Eurozone GDP q/q% PMI Output Index (manufacturing & services)
60
65
1.0
2.0
Markit Eurozone Composite PMI Eurozone GDP, q/q%
60
65
PMI Output Index (manufacturing & services)
45
50
55
-1 0
0.0
45
50
55
35
40
-2.0
-1.0
GDP
PMI
35
40
Germany
France
Italy
Spain
8
30
2006 2007 2008 2009 2010 2011 2012 2013
-3.0 30
2009 2010 2011 2012 2013
p

9. Monthly economic overviewMonthly economic overview
UK economy starts Q2 on good footing, after better-than-expected growth in Q1
The April PMIs signalled the fastest rate of expansion in the UK since the OlympicsThe April PMIs signalled the fastest rate of expansion in the UK since the Olympics--related growth spurt seen last August.related growth spurt seen last August.
A weaker currency boosted manufacturing exports while construction output stabilised and activity growth picked upA weaker currency boosted manufacturing exports while construction output stabilised and activity growth picked upA weaker currency boosted manufacturing exports, while construction output stabilised and activity growth picked upA weaker currency boosted manufacturing exports, while construction output stabilised and activity growth picked up
further in services. The improved survey data point to a good start to Q2 and, coming on the back of a betterfurther in services. The improved survey data point to a good start to Q2 and, coming on the back of a better--thanthan--
expected 0.3% increase in GDP in Q1 and above target inflation, meant the Bank of England saw no need for moreexpected 0.3% increase in GDP in Q1 and above target inflation, meant the Bank of England saw no need for more
stimulus at its May MPC meetingstimulus at its May MPC meetingstimulus at its May MPC meeting.stimulus at its May MPC meeting.
UKUK PMI and economic growthPMI and economic growth UK manufacturing exportsUK manufacturing exports
Composite PMI GDP, q/q% UK PMI Manufacturing Exports Index 3m/3m % chg exports (ONS)
57
62
0.5
1.0
1.5
p GDP, q/q%
60
65
8
12
U a u actu g po ts de 3 /3 % c g e po ts (O S)
47
52
1 0
-0.5
0.0
50
55
0
4
37
42
-2.0
-1.5
-1.0
GDP
PMI
40
45
-8
-4
UK goods exports
PMI New Export Orders
9
32
2006 2007 2008 2009 2010 2011 2012 2013
-2.5 35
2007 2008 2009 2010 2011 2012 2013
-12

10. Monthly economic overviewMonthly economic overview
Equities surge to new highs on central bank largesse
Global equities hit a postGlobal equities hit a post--crisis high again in early May, with the S&P 500 reaching an allcrisis high again in early May, with the S&P 500 reaching an all--time record. Earnings have nottime record. Earnings have not
disappointed but the main thrust comes from central bank stimulus boosting asset prices However with the FTSE All Worlddisappointed but the main thrust comes from central bank stimulus boosting asset prices However with the FTSE All Worlddisappointed, but the main thrust comes from central bank stimulus boosting asset prices. However, with the FTSE All Worlddisappointed, but the main thrust comes from central bank stimulus boosting asset prices. However, with the FTSE All World
index some 25% above its average over the past 12 months, equity price momentum and the PMI are moving in oppositeindex some 25% above its average over the past 12 months, equity price momentum and the PMI are moving in opposite
directions suggesting either improved equity sentiment will soon feed through to the real economy, or that stimulus is notdirections suggesting either improved equity sentiment will soon feed through to the real economy, or that stimulus is not
having the expected impact on growthhaving the expected impact on growthhaving the expected impact on growth.having the expected impact on growth.
WorldwideWorldwide equity pricesequity prices % change since:
pre-crisis
peak
end of
2012
last
month
FTSE All World Index, divergence from 12 month ave. Global PMI
FTSE All World -11.2 10.7 5.5
Dow Jones Industrial Ave. 6.6 15.3 3.4
S&P 500 4.3 14.5 4.520
40
60
60
65
S o d de , d e ge ce o o t a e G oba
FTSE 100 -2.2 11.6 4.9
Eurofirst 80 -37.2 5.9 6.9
Dax 30 -16 9 5 1 5 640
-20
0
50
55
Dax 30 -16.9 5.1 5.6
CAC 40 -35.9 8.7 7.9
Shanghai Composite -63.1 -1.0 1.6-80
-60
-40
40
45
Global share price momentum
Global PMI
10
Nikkei 225 -21.8 37.4 8.3-100
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13
35
Global PMI

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