From: US GIO <us.gio®jpmorgan.com> To: Undisclosed recipients:; Subject: J.P. Morgan Macro Skinny: Stabilizing at healthy levels Date: Mon, 25 Feb 2013 12:06:51 +0000 Attachments: 2013-02-23_Stabilizing_at_healthy_levels.pdf Inline-Images: image° 1 1.jpg; image001.png; image002.png; image004.png; image005.png; image006.png; image007.png; image008.png; image009.png; image010.png; image012.png February 23, 2013 Stabilizing at healthy levels Global growth stabilizing at a healthy level. After five straight months of impressive monthly gains, the global manufacturing surveys are taking a breather: the February manufacturing PM! was flat in Europe and a touch lower in the US. We had expected a downtick in the U.S. surveys (January 29th Macro Skinny) as higher taxes and the impending budget sequestration temper business sentiment. So this weakness is nothing to get worried about. The European manufacturing survey was disappointingly flat, but the silver lining here is the improvement in both France and Germany (the Euro-area average was probably dragged down by Italy, perhaps in response to heightened election uncertainty). The bigger surprise was the collapse in Europe's services PMI. It does admittedly imply a more protracted recovery, but one should not dismiss the impressive progress seen in manufacturing activity in recent months, which tends to be a more reliable forward-looking measure of growth. Taken together, European growth is still on track to improve from a run rate of -2% late last year towards 1% at the end of this year. It is an improvement, even if it's well below the pre-crisis trend of roughly 2%. Pending the February manufacturing surveys from the emerging markets, our best guess is for a global PMI index consistent with decent, 3.5% global GDP growth in the first quarter (left chart). The improvement in the global PMI from prior months is already showing up in the hard data. Global car sales, for example, have picked up sharply in