UBS produces a nifty global economic surprise series, which tracks the frequency at which global statistics beat or miss consensus expectations.
The more times the figures beat, the better the momentum.
The latest data, however, casts a worrisome trend on both growth and inflation. As UBS noted on Monday:
Global growth surprise index falters
Global economic data in recent weeks have tended to disappoint consensus forecasts. That is the message from the retreat in our global growth surprise index over the last three weeks. Notably, the overall result contrasts with some of the more high profile economic data, such as last week’s purchasing manager surveys, which have been more upbeat. The surprise index results, moreover, have tended to be more aligned with recent market setbacks.
Consumption data have disappointed
Also, recent consumption data have disappointed consensus forecasts. In the latter stages of 2009 our global consumption surprise index began to firm, offering some comfort to investors who had been concerned about the sustainability of the recovery. The recent dip in that index may have accentuated recovery concerns again.
Is inflation now a concern?
Inflation may be an added concern, gradually entering the mix. Our global inflation surprise index has climbed over the past few weeks. Higher-than-expected inflation outcomes have been recorded in various economies, most notably in the UK, Japan and China. US inflation outcomes, in contrast, have been well-behaved.
Here, meanwhile, is the growth chart beginning to trend lower:
And here’s the inflation chart:
And as UBS also notes, in that vein it’s interesting to observe the surprise indices are once again correlated with equity prices and bond yields.
Related link:
A global growth surprise from UBS – FT Alphaville