Factory export orders PMI sends best signal for global GDP - Bank of England

Reuters

LONDON (Reuters) - Surveys on manufacturing export orders have provided the single best real-time indication of global economic growth since 2008, helping guide the Bank of England's thinking, research from the central bank showed on Tuesday.

Since the financial crisis, an index compiled by bank JPMorgan from the polls of purchasing managers in 32 countries has sent the most accurate signals on the world economy, well before official statistics are available, Bank economist Kate Stratford said.

"The United Kingdom is a small open economy, so the pace of growth in the world economy is an important driver of UK activity," she wrote in the central bank's quarterly bulletin, noting the impact of demand for British exports and global effects on domestic consumer and business confidence, and on financial markets.

"It is therefore important for the Monetary Policy Committee to monitor changes in global demand," Stratford added.

The JPMorgan purchasing managers' export orders index is based on manufacturers' statements on whether their export orders have risen or fallen over the previous month and is released shortly after the end of each month.

By contrast, initial estimates of quarterly GDP are only available more than a month after the period in many countries.

Stratford said the export orders PMI (purchasing managers' index) provided a better signal of global growth than models combining various indicators between 2010 and 2012. Over the 2008-12 period, however, such combined models gave a better sense of where the global economy was going.

For the bulletin in full, click on http://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/default.aspx

(Reporting by Olesya Dmitracova; Editing by William Schomberg)

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