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Global Recovery Decelerates

Across major nations, IHS Markit noted that growth in the US, eurozone, China and Japan eased during the month, falling to two-month lows, 14-month lows, four-month lows and 17-month lows respectively
IHS Markit said, on a sector basis, growth of manufacturing production eased to an eight-month low and service sector  business activity rose to the weakest extent in almost a year-and-a-half.IHS Markit said, on a sector basis, growth of manufacturing production eased to an eight-month low and service sector  business activity rose to the weakest extent in almost a year-and-a-half.

It looks like the peak of the synchronized global economic recovery may already be behind us. The JP Morgan-IHS Markit Global All-Industry Output Index—an aggregate measure of manufacturing and services Purchasing Manager's Indices released over a given month—fell 1.5 points to 53.3 in March, leaving it at the lowest level in 16 months.

The index measure changes in perceived activity levels from one month to the next, surveying over 18,000 firms from 40 countries which account for an estimated 89% of global gross domestic product, Business Insider reported.

Anything above 50 signals that activity levels are improving while a reading below suggests they're deteriorating, with the distance away from 50 indicating how quickly activity levels are expanding or contracting.

So at 53.3, while activity levels continued to improve in March, they did so at the slowest pace since late 2016. As an indicator as close to real-time as one can get, it suggests momentum in the global economy slowed noticeably last month.

"The slowdown… was reflective of a general easing in rates of expansion across much of the global economy," said IHS Markit. "On a sector basis, growth of manufacturing production eased to an eight-month low and service sector business activity rose to the weakest extent in almost a year-and-a-half."

Like the headline index, a broad-based slowdown was reported across specific industries as well as individual nations. "Rates of increase… moderated in five of the six sub-sectors covered by the survey—business services, consumer goods, consumer services, financial services and intermediate goods—with only the investment goods category seeing production rise at a stronger pace," IHS Markit said.

Widespread Effect

"National PMI data also signaled a widespread growth deceleration. Although all-industry output rose in all of the countries covered, only India and Australia saw improved trends in output."

Across major nations, IHS Markit noted that growth in the US, eurozone, China and Japan eased during the month, falling to two-month lows, 14-month lows, four-month lows and 17-month lows respectively.

Mirroring that performance, all activity sub-indices, as well as sentiment towards output levels in the future, weakened compared to the levels reported in February.

New orders grew at the slowest pace in five months while measures on input and output prices also weakened, suggesting that global inflationary pressures are moderating.

"Inflation for both price measures remained sharper on average in developed nations compared to emerging markets," said IHS Markit.

While this report is a "soft" economic indicator, measuring sentiment based of what firms are seeing on the ground, it points to a likely deceleration in "hard" economic data in the months ahead.

With the early indicators pointing to a moderation in economic activity, and monetary policy globally gradually stating to tighten, it helps explain some of the recent pickup in financial market volatility.

Greatest Danger  

A trade war between the US and China represents the greatest threat to the world economy, the chairman of JP Morgan Chase International said on Friday.

"I think it's the greatest danger today to the world economy," Jacob Frenkel told CNBC's Steve Sedgwick at the European House Ambrosetti Forum when asked about the rapidly mounting import tariffs being proposed by the Trump administration and Beijing.

"It's still not a trade war—I would say there were some skirmishes, and there are skirmishes," Frenkel said. "I think we should all remember the disaster of 1931—always good intentions, to protect American jobs, and the result was a catalyst to the Great Depression. We should avoid it at all costs."

Frenkel was emphatic in his warning against an escalation of the economic dispute. "A world that is so interdependent, so interconnected, cannot afford shooting each other," he said. "The world in which the rules of the game are an eye for an eye is a world in which there are many blind people."

Trade War Fears

The escalating confrontation between Washington and Beijing inched closer to all-out trade war on Wednesday after China threatened retaliation against key US exports. The conflict, companies worry, could set back the global economic recovery.

On Wednesday, China said it would not be bullied by the US imposing punitive taxes on its products. The US has listed 1,300 Chinese goods, worth $50 billion, on which it plans to impose hefty tariff. Beijing issued a $50 billion list of US goods, including soybeans and small aircraft, for possible tariff hikes in an escalating dispute.

And on Thursday, President Donald Trump instructed the US trade representative to consider slapping an additional $100 billion in tariffs on Chinese goods in a dramatic escalation of the trade dispute between the two countries.

China said it was keeping a tab on US exports and would start taking actions the moment Washington implemented its plan to curb Chinese exports. Beijing issued a list of 106 items of US exports that it would tax heavily if the US pressed the trigger again.

"China strongly condemns and opposes the US tariff proposals and is ready to take reciprocal measures on US products," China's ministry of commerce said shortly after the US announcement.

Thursday's announcement was met with an uproar, even by members of Trump's own Republican Party, who have warned it could trigger another backlash.

"Hopefully the president is just blowing off steam again but, if he's even half-serious, this is nuts," Sen. Ben Sasse, R-Neb., said in a statement.

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