Since early 2018, based on the purchasing manager indices, a large number of countries have witnessed a decline in the assessment of new export orders which was bigger than the decline of the general climate in manufacturing. This suggests a dominance of foreign demand shocks, rather than domestic shocks, in explaining slower overall growth. The drop in new export orders echoes the significant slowdown in world trade growth. This is probably related to slower Chinese growth and, in many countries, slower growth in capital expenditures, which have a higher import content than consumption. Trade-related uncertainty may also play a role.
Since early 2018, survey indicators, starting from a high level, have weakened across the globe. This global cooling of the economic temperature is visualised in chart 2. It shows a heatmap based on the Markit purchasing manager index (PMI) for the manufacturing sector. A reading well above 50 corresponds to robust growth, whereas numbers below reflect a chillier or even cold environment. Chart 3 provides similar information for the new export orders component of the PMI survey.
Comparing charts 2 and 3, one notices that the assessment of export orders one year ago was, in general, slightly less upbeat than the overall PMI number. The latter remained at a high level for longer than export orders. Finally, several eurozone countries (France, Germany, Italy, Austria) and the eurozone as a whole saw a very significant deterioration in the outlook for exports.
