We called for a very strong bounce in global industrial production back in February/March.

Global IP (as we call it) is now roughly 9% above its March trough (on our estimates for October) and is already back to the pre-Lehman’s level.

That’s running around 15% p.a., the fastest in fifty years!

Still we think global momentum is pretty much peaking around now, maybe more like December/January in the US and Europe. And while we think growth will continue we don’t yet see signs that final demand will roar away over coming months. Especially perhaps in the US with the headwinds of State and Local Government belt tightening — Germany has a big tax cut coming at the start of next year.

So on our projections — we hesitate to say forecasts — global production should be growing nearer 5-6% p.a. by the spring, a pretty hefty slowdown.

Surprisingly, perhaps, much of this slowdown will come from China, where our measure of industrial production (slightly different from the official series) had soared to 35% per annum over the summer. Today’s Chinese PMI new orders reading is in line with our view that momentum will slow to a mere 12% p.a. by spring.  Still very robust growth by any standard.

Actually, it is much easier to picture the process if you look at it in level terms, as in the chart below, which compares the current cycle in global industrial production with selected episodes for US industrial production, including the banking panics of 1893 and 1907, and the 1973/4 recession, (until now the deepest post-war recession).

Jonathan Wilmot, chief global strategist at Credit Suisse Investment Bank, is blogging at FT Alphaville for the day.

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This entry was posted by Jonathan Wilmot on Tuesday, December 1st, 2009 at 13:15 and is filed under Capital markets, People. Tagged with credit suisse, Jonathan wilmot. Edit this entry.