Global Trade Volume And Industrial Production Both Break Records In July

Includes: IPN
by: Mark J. Perry

The CPB Netherlands Bureau for Economic Policy Analysis released its monthly report this week on world trade and world industrial production for the month of July 2013. Here are some of the highlights of that report:

1. World merchandise trade volume (adjusted for price changes) increased by 2.2% in July from June, and by 3.6% from a year ago to reach a new all-time record high in July (see blue line in chart above). On a month-over-month basis, both import growth and export growth for July were much stronger in the emerging economies (5.4% for imports and 4.0% for exports) than in the advanced economies (-0.5% for imports and 1.4% for exports).

2. Annual growth in trade activity over the last year was led by the emerging economies with a 5.4% increase in exports and an 8.2% increase in imports, while advanced economies experienced an increase in exports of 1.5% and a slight decrease in imports (-0.2%).

3. At a new record high of 131.9 for the trade index in July, the volume of world trade is now nearly 8% above its previous cyclical peak of 122.2 in early 2008, and almost 35% above the recessionary cyclical low of 98 in May 2009.

4. World industrial production (adjusted for price changes) increased in July on a monthly basis by 0.5% to a new record high, led by monthly growth of 0.9% in the emerging economies compared to only 0.1% growth in the advanced economies in July (see red line in chart). On an annual basis, world industrial output increased 2.4% in July, with especially strong year-over-year output growth in Emerging Asia of 7.0% followed by growth of 1.4% in the US. Output in July declined in the Euro area by -2.7% from a year ago, and by -1.3% in Africa and the Middle East.

5. At an all-time high index level of 121.3 in July, world industrial output is now 7% above its previous recession-era peak in February 2008 of 113.5, and 23.3% above the recessionary low of 98.4 in February 2009.

Bottom Line: World industrial output and world merchandise trade both reached new record monthly highs in July. The volumes of world output and trade are now both solidly above their previous peaks during the early months of the global slowdown in 2008 (by 7% and 8% respectively), suggesting that the global economy has now made a complete recovery from the 2008-2009 economic slowdown. At the forefront of the global economic expansion this year are the emerging economies, which experienced especially strong growth over the last year through July in both trade (8.2% import growth and 5.4% export growth) and industrial output (4.1%).