Global consumer spending slowdown eases
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With a period of unprecedented economic uncertainty, the businesses and governments still need to come to a view on where we are in the cycle to decide when the right time is to invest and when they should play it safe.
To help identify where we are in the consumer cycle we have developed our Global Consumer Index. The Index is a leading indicator of growth in the global consumer cycle, it comes out 2-3 months before corresponding economic data, so it gives an early indication of what’s going on, plus historically it’s very closely followed the actual figures for consumer spending.
The latest figures for the Index show a very negative picture. We had five consecutive monthly declines during the summer although the latest number has picked up slightly from 1.5% in September to 1.7% in October. The momentum measure for the Index which measure the 3 month annualised growth rate is showing a very similar picture and that currently stands at 1%. We will be publishing the Index on a monthly basis in our Global Economy Watch Report so you should look out for it over the next few months to give an indication of whether we think the global economy is going to be accelerating or slowing down over the next quarter.
Overview
Growth in global consumer spending is has been slowing – but the latest value of our new Global Consumer Index (GCI) suggests that the slowdown may have eased in October. This may lead to a gradual recovery in 2013.
The Index is a leading indicator of trends in the global consumer cycle. It combines dozens of economic series into a single index, which historically has tracked global consumer spending closely. It is unique in that it provides an early warning indicator of trends at a global level, giving businesses and policy makers an indication of future consumer demand for goods and services and an early steer on short-term growth prospects.
Annual growth in the index declined for five consecutive months over the summer, although the latest value shows it ticking up to 1.7% in October, from 1.5% in September. This is significantly below the long-run average value of 2.7%, and the recent figures are the lowest since the end of the financial crisis.
The momentum figure, based on a three month annualised growth rate, shows a similar trend. Following four consecutive and sharp monthly falls, this briefly turned negative in August. The latest value shows it recovering slightly to 1.0% in October from 0.2% in September. This is a relatively good story, as had the Momentum score stayed negative it may have implied a double dip in the consumer spending cycle.
Main charts
Source: PwC Analysis
Source: PwC Analysis