S&P Global — 5 August 2024
Daily Update: August 5, 2024
The Global Economy Looks Fine
By Nathan Hunt
Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy
Global growth and consumer spending continue to chug along modestly, but there are enough possible storm clouds on the horizon that no one is likely to feel exuberant about global economic activity. Inflation is moderating, but still slightly above targets, and established economic indicators are positive, although perhaps less positive than a month ago. The global economy isn’t bad, but it isn’t great either. It is fine.
In the second quarter of 2024, consumer spending remained resilient with some regional variation. Global demand for goods and services rose, although demand in Europe lagged that of the US and Asia. S&P Global Market Intelligence Purchasing Managers’ Index survey data showed that spending on consumer goods and services activities, including tourism, restaurants and other recreation, grew for the seventh consecutive month in June. Services demand generally grew faster than goods demand in the second quarter. While the PMI data indicates growing demand, that growth fell in the previous month to the lowest level since 2023.
One feature of inflation over the past three years has been the swing between services and manufacturing as the primary driver for higher prices. During COVID-19 lockdowns, manufacturing was the driver of inflation. Supply chain disruptions and higher demand for goods from consumers stuck at home pushed prices higher. As lockdowns eased, services became the primary driver, as demand for travel and entertainment drove an increase in prices. In June, global PMI data compiled by S&P Global showed that prices for goods and services rose at the lowest level in the last 3.5 years. This may indicate that global inflation is finally moderating after the pandemic disruptions.
Using historical models, PMI results from June indicate that the global economy is growing at 3%. However, the data also shows softening growth prospects. PMI surveys include questions about anticipated output that is used to create the PMI Future Output Index, which is based on sentiment rather than actual orders. This index is frequently used to indicate confidence in growth. In June, the PMI Future Output Index showed the lowest level of optimism in seven months.
Ken Wattret, global economist at S&P Global Market Intelligence, said that global growth is being supported by moderating inflation, more accommodative financial conditions and a pickup in global trade. Wattret’s projection for actual global GDP growth is unchanged at 2.7%. The economist suggests that inflation will continue to moderate, led by more stable prices for core goods, although upside risks to inflation include tight labor market conditions, adverse weather, disruptions to supply chains and increased protectionism. Wattret anticipates that central banks will loosen monetary policy over the next six months, although a return to pre-pandemic interest rates looks unlikely.
Today is Monday, August 5, 2024, and here is today’s essential intelligence.
As High Inflation Dents Consumer Demand, Sustainability And Plastics Recycling Initiatives Take A Hit
In the Americas, the recycled market dynamics for polyethylene terephthalate, or PET, vary significantly across regions, with challenges and opportunities influenced by factors such as geography location, local policies, consumer behavior and the availability of recycling infrastructure. Demand for recycled PET in the Americas is seasonal, with a noticeable increase as the weather warms up in spring and summer. This uptick is linked to warmer temperatures that boost consumer spending, particularly on products packaged in PET, such as beverages convenience food, and outdoor recreational items.
—Read the article from S&P Global Commodity Insights
Week Ahead Economic Preview: Week of 5 August 2024
US PMI data, including the ISM services and detailed sector PMI data from S&P Global, will be in focus in the fresh week providing further insights into US economic conditions after the Fed hinted at a potential September rate cut. Specifically, further confirmation of easing inflationary pressures, especially in the service sector will be crucial to cement the Fed's intent for lowering interest rates, with flash PMI so far having indicated a further encouraging moderation of service sector inflation in July.
—Read the article from S&P Global Market Intelligence
Industry Credit Outlook Midyear 2024: Quietly optimistic
A quiet optimism pervades S&P Global Ratings’ industry credit outlook updates, with positive earnings growth expected, financial markets buoyant and credit and interest rate pressures easing. For weaker credits the picture is bleaker, however, with refinancing risks acute. High labor costs continue to cause anxiety, and supply-chain fragility is still apparent and vulnerable to escalating geopolitical risks and trade tensions. The AI super-cycle continues to power on, absorbing capital investment. And climate-related risks, regulations and adaptations are increasingly material for credit
—Read the article from S&P Global Ratings
Listen: Shifting Flows: US Diesel Displaces Middle Eastern Supply To Europe
In July, US diesel exports to Europe surged to multi-year highs, displacing Middle Eastern flows due to inverted arbitrage economics and a bearish near-term outlook for the commodity in Europe. In this episode of the Platts Oil Markets Podcast, host Joel Hanley is joined by Nadia Bliznikova, Robert Perkins and Rebeka Foley to explore the latest developments in diesel flows, crack spreads and the macroeconomic environment influencing supply and demand balances in the Atlantic basin.
—Listen and subscribe to the podcast from S&P Global Commodity Insights
Russian Crude Exports Sink To 1-Year Low In July As Moscow Directs More Oil To Refiners
Russian seaborne crude exports slumped to a 12-month low in July amid thinning discounts for Moscow's oil, improved compliance with OPEC+ output cuts, a recovery in domestic refining and a seasonal dip in demand from Indian refiners. At the same time, oil product exports rose 6% on the month, according to tanker tracking data, as Russian refineries mostly recovered from Ukrainian drone strikes absorbing more crude.
—Read the article from S&P Global Commodity Insights
NBCU Sets Olympic Ad Sales Mark With More Than $1.25B From Paris Summer Games
Longtime US rightsholder NBCUniversal Media LLC has surpassed its Olympic ad sales record and stands to add to the total amid strong viewership for the Paris Games. While NBCU did not disclose a specific sales figure, its previous record of $1.25 billion was set with the pandemic-delayed Tokyo Games in 2021. Given the high levels of linear and streaming viewership, some advertising projections indicate NBCU's Olympic total could hit $1.4 billion as the company is still selling some linear and streaming inventory.
—Read the article from S&P Global Market Intelligence
European Structured Finance Conference 2024 (Sept. 5, 2024)
Our conference provides a unique opportunity to hear from S&P Global Ratings' senior European structured finance analysts, renowned industry experts, engage in interactive panel discussions and connect with other market participants in person.
—Register for the event from S&P Global Ratings