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Chief economist update: Tomorrow never dies

"Don't stop thinking about tomorrow
Don't stop, it'll soon be here
It'll be better than before
Yesterday's gone, yesterday's gone..."

-Fleetwood Mac

Wall Street rebounded big time the day after markets were buffeted by headlines concerning the confluence of the three C's - capital gains tax, coronavirus and climate change - sending its four major benchmark equity indices in the red and dragging down most others around the world.

Certainly, the three C's are cause for concern but, in the words of former US defense secretary Donald Rumsfeld, these are "known knowns".

Then again, the good tidings in store for "tomorrow" are known too.

To paraphrase what I scribbled on this space on the day: The US reporting season has so far seen company earnings expectations, the rate of vaccinations in Europe and in the US has been accelerating, and the global economic recovery is gaining momentum.

Mea culpa, but I've forgotten to include the commitment and assurances from global central banks and governments to keep on giving until the yoke of yesterday gives way to a better tomorrow.

Latest readings from Markit Economics' PMI surveys suggest that if we're not already there, we are getting oh so close.

  • The IHS Markit flash US Composite PMI rose to a reading of 62.2 in April - an all-time high - from March's final reading of 59.7, with activity in both the manufacturing (60.6) and services sectors (63.1) ramping up to their highest levels on record.
  • The IHS Markit flash Eurozone Composite PMI increased to a nine-month high reading of 53.7 in April (from 53.2 in March). The region's manufacturing PMI rose to a record high of 63.3 while the services PMI went up to a reading of 50.3 - the highest and first reading indicating expansion in eight months.
  • The IHS Markit / CIPS Flash UK Composite PMI surged to 60.0 in April - the highest reading in around seven and half years. The manufacturing PMI jumped to 60.7, the best reading in nearly 27 years while the PMI for services rose to 60.1 - the highest in 80 months.
  • The au Jibun Bank flash Japan Composite PMI registered its first expansion in 15 months, rising to 50.2 in April, aided by the continued strengthening of its manufacturing sector - 54.2 in April from 53.3 in March. However, Japan's service sector remains in contraction unchanged at 48.3 in April from March. The third state of emergency recently announced by the Japanese government would keep activity in the service sector subdued in the coming months. This will be offset by continued strength in manufacturing on the back of the revival of the global economy.
These are the latest indications that the world economic recovery is assured and while challenges remain, governments and central banks and health institutions are there to ensure that the butcher, the baker and the candlestick maker, and those that invest in them, see a better tomorrow.

Read our full COVID-19 news coverage and analysis here.