World economy has survived a speed bump
The German data showed that growth slowed to 0.3% in the first quarter, from 0.7% and 0.6% in the final two quarters of last year.
The data were very much in line with figures already published for other eurozone economies.
Meanwhile, the Japanese economy actually contracted by 0.2% in the first quarter, the first decline in nine quarters.
We already knew that UK growth slowed sharply in the opening quarter of 2018, with GDP rising by just 0.1%, the weakest rate since 2012.
In the US, the economy grew by 0.6% in the first quarter, the slowest rate in the past year.
Temporary factors are believed to be largely responsible for this slowdown in activity and there are already signs that growth is strengthening again.
In the eurozone, unseasonably bad weather, strikes, and an outbreak of flu weighed on output earlier in the year.
There are indications that activity regained momentum towards the end of the first quarter, with industrial production rising by 0.5% in March, after registering big declines in January and February.
Unusually severe weather also depressed activity in Japan in the first quarter, most notably construction and consumer spending.
In the US, consumer spending slowed in the first quarter, after households had to raise their spending in the final quarter of last year to replace goods, such as cars, that were damaged or destroyed in extreme weather events.
As in Europe, there are signs that activity in the US has regained momentum in the last couple of months, after a weak start to the year.
Both retail sales and industrial production rose strongly in March and April.
There has also been a narrowing in the trade deficit, as a surge in imports subsides.
It would not be a surprise if the US economy grows by close to 1% in the second quarter.
Survey data for April also improved in most economies.
The JP Morgan Global Composite PMI, covering manufacturing and services activities in a large number of economies, rose to 53.8 in the month, up from 53.3 in March.
US consumer-confidence data were very strong in April.
In the Eurozone, both the PMIs and EC Economic Sentiment index recorded strong readings in the month.
Overall, then, we expect to see much-improved GDP growth figures in the US, eurozone, UK, and Japan for the second quarter of the year, as the temporary factors that weighed on activity earlier in the year have now abated.
The recent strengthening in data is impacting financial markets.
Bond yields are on the rise again, with the yield on ten-year US treasuries climbing to a seven-year high of 3.1%.
Stock markets are also being supported by improving data.
We remain optimistic about the prospects for the global economy in the second-half of this year and into 2019.
Interest rates are set to remain low nearly everywhere, while fiscal policy is turning more expansionary.
Activity should also be aided by continuing good employment growth and a likely, modest pick-up in wage inflation, which will boost spending power.
It is not surprising, then, that the IMF is forecasting close to 4% growth for the world economy in both 2018 and 2019.
