Leading Global Barometer rising towards historical average

In August, the Global Barometers increase for the second month in a row across the regions. The Coincident Barometer continues to slowly improve in 2023 while the Leading Barometer advances more rapidly, approaching almost the neutral level of 100 points. 

The Coincident Global Economic Barometer increases by 1.5 points to 87.2 points in August 2023. The Leading Barometer rises 2.9 points to 96.3 points, its highest level since February 2022. The distance between the indicators increased to 9.1 points, the largest difference since May this year. The results were driven by advances in all three regions analysed.

“The level of activities and the labor market in economies around the world have been showing resilience at the beginning of the second semester, despite the restrictive movements of monetary policy against the challenge of inflation. The Global Barometers reflect the improved expectations in this context, whereby the probability of a stronger slowdown in the various regions and sectors has been, for now at least, significantly reduced”, evaluates Paulo Picchetti, researcher of FGV IBRE.

Coincident Barometer – regions and sectors

In August, the largest contribution to the increase in the Coincident Barometer came from the Asia, Pacific & Africa region with 0.8 points, followed by Europe and the Western Hemisphere with 0.5 and 0.2 points, respectively. The Western Hemisphere records its fourth consecutive increase, accumulating 8.1 points. After remaining stable at a low level, the coincident Barometer is slowly showing small signs of improvement. In line with the tightening of monetary policy in various countries to combat inflation, these signals are still weak. The graph below shows the contribution of each region to the deviation of the Coincident Barometer from the historical mean of 100 points. 

The Coincident sector indicators present diverse results this month. The indicators for the Economy (aggregated business and consumer evaluations), Trade, and Construction rise, while the indicator for Services falls slightly and Industry remains constant.

Leading Barometer – regions and sectors   
The Leading Global Barometer leads the world economic growth rate cycle by three to six months on average. In August, the Asia, Pacific & Africa region contributes 1.2 points, followed by Europe and the Western Hemisphere with 1.0 and 0.7 points, respectively. In general, the level of the indicators suggests moderately skeptical expectations for world economic activity, with gradual improvement in the past two months.

The Leading indicator sectors for Services, Industry, and the Economy (aggregated business and consumer evaluations) increase in August, while the indicators for Construction and Trade decrease this month. With this result, Services returns to a level above 100 points, reaching its highest level since February 2022 (105.0 points).