​Global money trends still aren’t signalling an economic recovery.

Six-month growth of real narrow money in the G7 economies and seven large emerging economies is estimated to have edged up to 1.9% (not annualised) in June but remains well below a post-GFC average of 3.2% (i.e. calculated over 2010-18) – see first chart. A rise to this level is probably needed to signal an economic recovery, in the sense of a return to trend expansion.

The June increase in real money growth was driven by China – second chart. US growth remains weak and there was a sharp slowdown in Japan, partly inflation-driven. The final June figure will depend importantly on Euroland and UK monetary data, to be released on 24 and 29 July respectively.

The implication that global economic growth will remain below trend at least through early 2020 suggests a coming rise in unemployment, with attendant additional pressure for central bank policy easing.

The forecast of an unemployment turn is supported by G7 consumer surveys: the net percentage of consumers expressing a negative view of labour market conditions rose to a 21-month high in June – third chart.

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