Slowly but not surely, the world economy is emerging from its coronavirus-enforced hibernation.
As governments ease lockdowns of businesses and allow consumers to travel and shop again, measures of high-frequency data and confidence increasingly suggest a bottom has been reached in the worst global recession since the Great Depression.
A new set of daily activity gauges from Bloomberg Economics finds almost all of the economies it monitors witnessed a pick-up in activity since late March and early April, although no country is yet approaching its pre-virus levels. Germany, Japan and France are among those rebounding the fastest, while Spain and the U.K. remain relatively weak.
A legacy of higher unemployment, bankruptcies and health fears also means recoveries are likely to be slow and sluggish after an initial bounce, with a full rebound unlikely before the discovery of a vaccine. The risk remains that the deadly virus could spike again, forcing constraints to be slapped back on.
“The picture is generally getting better, but it is a slow crawl out,” Deutsche Bank Securities Chief Economist Torsten Slok told Bloomberg Television. “We are standing at the bottom of the canyon and looking up.”
Policy makers are working to add momentum to the climb back with yet more economic stimulus. Japan on Wednesday announced more than $1 trillion of extra help for households and businesses, while the European Commission unveiled a package worth as much 750 billion euros ($825 billion) to help the continent’s worst-hit economies.
Investors, for their part, are showing signs of confidence. European stocks rose on Thursday, and shares climbed in most of Asia as continued signs of economies reopening were weighed against the increase in Sino-American tensions over Hong Kong.
In China, which was the original epicenter of the virus, the earliest indicators for May suggest its recovery is continuing. Official purchasing managers’ indexes should show the recovery making more headway, with the services sector probably continuing to rebound at a robust pace, according to Bloomberg Economics.
China Manufacturing and Non-Manufacturing PMIs
Asia’s policy makers continue to add stimulus to counter concerns in export-oriented economies that the blow to global demand will weigh on their outlooks. The Bank of Korea cut its key interest rate to a record low on Thursday.
Among the trade engines in Asia, signs that manufacturing is improving haven’t yet been accompanied by a pickup in services. South Korea’s first 20-day export orders showed mild improvement in May, while still in double-digit decline, while export orders for Taiwan in April grew for a second month.
Those figures from Korea and Taiwan are favorite early indicators for Shaun Roache, Asia-Pacific chief economist at S&P Global Ratings in Singapore. He says “global demand for tech is proving quite robust,” while services data “are still weak almost everywhere.”