Varying global economic conditions still intact, says Global Trade Pulse report

A mixed global economic outlook based on recent projections both the global and North American economies was evident in the most recent edition of the “Global Trade Pulse” from global maritime and trade consultancy Hackett Associates.

Hackett officials describe the report as a short-term index that offers up “the sentiment for trade at a glance,” akin to other key economic metrics like the PMI and Consumer and Carrier confidence indices, while providing access to specifically see where a group of economic indicators are in relation to trade for the current month, too.

In terms of how data and information within the Global Trade Pulse is compiled, Hackett explained it models container trade for both North America and Europe, which accounts for 67 percent of global trade, according to data from Container Trades Statistics. What’s more, Hackett noted that the East-West focus of the Pulse “represents the large majority of developed world consumer demand,” and that “planning for the immediate future will be easier and…will provide improved clarity to current events.”

The data in the February edition of the report highlights how in recent weeks the International Monetary Fund and the Organization for Economic Co-operation and Development respectively reduced estimates for global growth in 2016 and beyond, with:
-the IMF lowering its 2016 and 2017 forecast by 0.2 percent, due to anticipated slower growth from emerging economies, while it added that U.S. growth momentum is expected to hold steady, rather than gain further steam; and
-OECD reduced its forecast for global growth for 2016 by 0.3 percent to 3 percent, noting that the U.S. is expected to deal with increasing headwinds, including export drag because of the stronger dollar and energy sector investment from low oil prices

North American data: The report’s North America Import Pulse for December, the most recent month for which data is available, at 106.0 (2012=100) was down 6.3 percent compared to November and down 3.4 percent annually. The North America Export Pulse at 102.4 was down 4.6 percent compared to November and down 6.4 percent compared to December 2014. December imports for North America at 109.7 were down 1.7 percent sequentially and down 0.2 percent annually, with exports––at 96.2––down 1.0 percent sequentially and down 1.1 percent annually.

Hackett said the 6.3 percent drop in the Import Pulse translates into a 3.4 percent annual decline, with the 4.6 percent drop for the Export Pulse translating into a 6.4 percent annual drop. And it added that Gulf Coast imports rose 1 percent compared to November at the expense of the West Coast, with exports for both coasts up 1 percent, while the East Coast dipped 2 percent.

European data: The Import Pulse for Europe at 106.4 was up 1.5 percent sequentially and was down 2.6 percent annually, and the Export Pulse at 114.3 rose 1.3 percent sequentially 4.4 percent annually. European imports in December at 117.8 saw a 19.5 percent decrease compared to November while rising 3.6 percent annually, and exports for the same period at 114.3 were up 6.4 percent sequentially and off 0.1 percent annually.

Hackett Associates Founder Ben Hackett said in a recent interview that despite better than expected GDP growth in the U.S. and mild retail sales gains, a still too high inventory-to-sales ratio remains a concern.

“It is high and not budging,” he said. “And it is really high when looking at it compared to recent years. If the U.S. economy was not growing so rapidly, it would possibly signal a recession, but it is not the case even with the imbalance in the inventory-to-sales ratio. Part of the problem looks to be the ongoing increase in online sales purchases taking place, which is catching retailers off balance a little bit and impacts different types of sourcing.”

And he explained that the continuing rise of the average inventory-to-sales ratio is not good as it suggests that both retail sales and industrial production are not as high as they should be.