A Standard Life Investments report written by head of global strategy Andrew Milligan, UK economist James McCann and senior international economist Jeremy Lawson said global business sentiment is “consistent with above trend global output growth”.
The report said loose financial conditions and pent-up demand in most developed economies after years of tepid growth has seen the global composite Purchasing Managers Index (PMI) hold up at 55.1.
“That reading is a little lower than the levels recorded in June and July, but is still the third outturn since the beginning of 2011,” said the report.
Standard Life Investments said the global recovering is also becoming less dependent on manufacturing activity to drive growth with the global manufacturing PMI at 52.6 while the global services PMI is now at 55.5.
The report said while the overall outlook for the global economy is positive, not all countries and regions are sharing in the wealth equally.
“The US and UK continue to lead the way, reinforcing our view that the Federal Reserve and Bank of England will be the first central banks to begin raising short-term interest rates,” said Standard Life Investments.
“The US in particular appears to be accelerating into the second half of the year, led by vehicle sales and business investment.”
The report said the recovery in the Euro-zone on the other hand is in “danger of petering out” before it even had a change to begin.
“The biggest drags are still France and Italy, although even German growth has moderated of late,” said the report.
The performance of Brazil, Russia, India and China has been mixed, according to Standard Life Investments.
“Chinese authorities are pushing to hit their 7.5 per cent growth target despite the related financial risks being generated, while Russia is sinking under the weight of sanctions and Brazil has fallen into recession,” said the report.
“Only the Indian economy seems likely to accelerate in the second half of the year.”
