The forecast of a reacceleration in G7 industrial momentum later this summer – based on faster real money supply growth since early 2011 and an unwind of Japan supply disruptions – is supported by today's Federation of Korean Industries survey for June.
Korean indicators are often early to detect shifts in global momentum, reflecting the economy's orientation towards exports (52% of GDP in 2010) and intermediate goods production. A slump in FKI manufacturing expectations this spring foreshadowed a sharp fall in G7 PMI new orders – see previous post.
Korean expectations recovered modestly in May, maintaining the improvement in June – see chart. This suggests that G7 new orders bottomed in May or, more likely, June.
Today's US Richmond Fed manufacturing survey provides a further hint of revival, with current and expected new orders rising in June, bucking the trend of weakness in earlier surveys from other regions.
