Welcome to the 5th Topdown Charts ChartBrief, today we look at trends in global industrial production growth (as a gauge for global economic activity). The approach taken is a little unusual and unorthodox; I've taken all the countries that release Industrial Production (IP) data (with at least 7 years history - of which there are 61) and averaged their annual growth rate. But I didn't stop there, I wanted to see what the breadth was like so I added a line to the chart which shows the proportion of countries with negative year-on-year industrial production growth. What I found shocked me...
It turns out that in the post-GFC environment (I'm talking about after the one-off blip recovery in 2010 i.e. benevolent base effects) on average 40% of countries experienced negative annual IP growth. 40%! And the latest reading is 46% - that's basically 50%... half of the world is seeing industrial activity declining on an annual basis. It helps explain why global growth has been so poor post-GFC i.e. because almost half of the countries of the world were still in recession. This is what I mean when I say desynchronized global growth, and why other leading indicators are sending such mixed signals. This theme or trend means global growth remains fragile, and the recent trend in industrial production growth in the chart above is troubling to say the least.