OPEC Monthly Oil Market Report – August 2017
Graph 3 - 1: Manufacturing and non-manufacturing ISM indices
Due to the lacklustre growth in the particularly the 1Q17, the
forecast for 2017 has been
revised down slightly to 2.1% from 2.2% in the previous month. The level of growth for 2018 remains
unchanged at 2.2%. Further upside to GDP growth may materialise if the government successfully pursues
envisaged reforms, particularly tax reforms. However, numerous uncertainties remain, mainly in the areas for
political decisions, and also monetary policies remain uncertain and to some extent dependent on the
upcoming debt ceiling decisions.
The economy of Canada continues to improve significantly.
increased by 10.6% y-o-y
in May, the highest rate since 2000 and compared with 4.4% in April. This positive momentum remained
supported by rising exports, which have been boosted by improvements in the oil sector and the improving
US market, as well by general improvements in global trade.
rose by 12.4% y-o-y in June, after
17.6% y-o-y in May and after reaching 14.4% y-o-y in April. Retail trade also continued to expand at the
considerable level of 10.3% y-o-y in May, after 4.5% y-o-y in April. This is the highest level of growth since
the beginning of 2010. The
for manufacturing rose too and reached 55.5 in July, after 54.7 in June and
reaching 55.1 in May. Taking this positive momentum into consideration, the
forecast for 2017
was revised up to 2.3% from 2.1%. Growth in 2018 remains unchanged at 1.9%.
OECD Asia Pacific
The latest economic indicators confirm the continuation of Japan’s gradual economic expansion. This is
supported by growth in exports, investments, healthy domestic demand and ongoing monetary and fiscal
stimulus. As the labour market remains extremely tight and since industrial resources are also being utilised
at around full capacity, the upside from the current annual growth level of around more than 1% is very
limited. Structural reforms would need to continue to lift the growth level over the medium- to the long-term.
Business sentiment is holding up well and also supporting the current growth trend. Inflation remained in
positive territory, though it remains very low, and wages unexpectedly declined in June. This income
situation is adding some caution about the near-term development. Given that there is technically full
employment in Japan’s economy, rising income would be the important key determinant to raise consumer
sentiment and also inflation. In the meantime, the Bank of Japan (BoJ) continued its monetary stimulus and
also acknowledged that the inflation target of 2.0% may only be reached in 2019. Moreover, the recent
changes in the Prime Minister’s cabinet seem to add stability as well, after some period of rising political
ISM manufacturing index
ISM non-manufacturing index
Sources: Institute for Supply Management and Haver Analytics.