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May 14, 2018 | Global Equity
Economic Scorecard: Growth Firm but Not Accelerating

Global Strategist

Olga Bitel, partner, is a global strategist. She is responsible for economic research and analysis across all regions and sectors. She distills macroeconomic and geopolitical developments into actionable insights for global equity portfolios within a multifaceted strategic framework. In addition, she provides insights about cyclical turning points and structural trends as inputs into portfolio construction in predominantly bottom-up investment approaches. Before joining William Blair in 2009, Olga was a senior economist at the National Institute of Economic and Social Research in London, United Kingdom, where she produced macroeconomic forecasts for most Asian economies and led thematic research projects for some of the world’s best-known international organizations, including the Organization of the Petroleum Exporting Countries and the International Monetary Fund. Olga received a B.A. from the University of Chicago and an M.Sc. in economics from the London School of Economics and Political Science.

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Previously, I described how we use a tool called the macroeconomic scorecard to inform our fundamental research. In our Macroeconomic Scorecard series I share an updated scorecard and provide key takeaways from our analysis.

The scorecard provides an easy, real-time comparison of key economic indicators across most developed markets and major emerging markets. See below for a more in-depth description of our macroeconomic scorecard.

Here are our latest insights from the macroeconomic scorecard:

  • Growth remains firm, but is no longer accelerating
  • PMIs in Europe and Japan are at high levels, and with nowhere to go are starting to roll over
  • Growth in emerging markets is accelerating
  • China remains stable
  • There is continued improvement in Brazil
  • Significant deceleration can be seen in Mexico
  • South African consumer growth is improving rapidly

Scorecard Basics

Our macroeconomic scorecard consists of five panels, each of which details a single data series. The first three indicators deal with the supply side of the economy, and the last two deal with the demand side (consumer behavior). These indicators include industrial production, manufacturing purchasing managers’ indices (PMIs), manufacturing PMI orders minus inventories, retail sales, and motor vehicle registrations. All of these indicators are high frequency (they come out monthly) and are available at the country level.

For each indicator, we show the annual growth rate as well as the one-month and three-month changes in that growth rate. The idea is to see whether the current rate of growth is decelerating or accelerating.

The Indicators

Industrial production. These figures can frequently move the markets because they are considered to be an indicator of future inflation.

Manufacturing PMIs. This survey-based data provides clues not just about the health of the manufacturing sector, but economic growth in general. Many investors use the PMI as a leading indicator for the growth or decline of gross domestic product (GDP).

Manufacturing PMI orders minus inventories. The most forward-looking component of manufacturing PMI, this data is a testament to how company managers think about their order books versus their current production trends. This gives us a predictable indicator of what future industrial volume growth is likely to be.

Retail sales. Retail sales are an important economic indicator because consumer spending drives much of our economy.

Motor vehicle registrations. Cars are an excellent indicator of consumer behavior. If you don’t have sustainable income growth or credit growth, you are unlikely to purchase such a big-ticket item.

For previous analysis see Macroeconomic Scorecard Points to Economic Expansion and Macroeconomic Scorecard: Growth Accelerates

Olga Bitel, partner, is a global strategist on William Blair’s Global Equity team.

Global Strategist

Olga Bitel, partner, is a global strategist. She is responsible for economic research and analysis across all regions and sectors. She distills macroeconomic and geopolitical developments into actionable insights for global equity portfolios within a multifaceted strategic framework. In addition, she provides insights about cyclical turning points and structural trends as inputs into portfolio construction in predominantly bottom-up investment approaches. Before joining William Blair in 2009, Olga was a senior economist at the National Institute of Economic and Social Research in London, United Kingdom, where she produced macroeconomic forecasts for most Asian economies and led thematic research projects for some of the world’s best-known international organizations, including the Organization of the Petroleum Exporting Countries and the International Monetary Fund. Olga received a B.A. from the University of Chicago and an M.Sc. in economics from the London School of Economics and Political Science.

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