Globe (2)

There was good news yesterday, on what are euphemistically called the advanced economies.

We didn’t get data on the entire, so called, advanced world but we did get data on the US, euro area and Japan. And collectively, if the data is any guide, they are on course for growing at three per cent in the second quarter of this year, the fastest growth rate in three years.

The latest flash purchasing managers indexes (PMIs) were out yesterday. By flash, it means an early reading, the more comprehensive PMIs are out during the first few days of June.

The flash PMI for Japan and US did in fact fall a tad on the month before, and the PMI for the euro area picked up, meaning that the aggregate reading dropped from 54.4 in April to 54.2 in May. But these readings are still comfortably above the critical 50 no change mark.

The news was especially good for the euro area, where the PMI jumped to a six-year high, and if past data showing the link between these readings and subsequent data on GDP is any guide, the area is now growing at 0.7 per cent.

There was also good news on inflation, with sub-indexes tracking input prices in the three regions falling and as Nikita Shah, Global Economist at Capital Economics said: "Core inflation in the eurozone and Japan in particular [is] set to remain well below target.”

What are the implications?

US interest rates may well go up next month, but it seems that central banks in the euro area and Japan will keep rates on hold, and monetary policy will remain ultra-loose for some time.

But the data does rather make claims that the EU would fall a part in the wake of the Brexit vote look somewhat ludicrous.

If anything, the success of the Brexit vote and the rise of Donald Trump has led to something of a backlash in the EU – certainly in France, where Marine Len Pen is talking about backtracking on her party’s policy of leaving the EU and now talk of a combined EU defence policy to counteract what is seen as an erratic US is gaining ground.