That’s the message from UBS AG, which says it’s headed for near-stagnation. Economists led by Pierre Lafourcade at Switzerland’s largest bank said their new model strips out volatility in data to show growth has “softened substantially since the beginning of the year” and is headed “close to zero in the near future.” While Purchasing Managers Indexes plunged immediately following the result of the Brexit referendum in June 2016 but then recovered, the UBS economists say their hard-data indicator has turned down more recently.
“We put less stock in soft or survey data -- emotions show up in surveys but the data are the data,” they said. Lafourcade said the “striking feature” in his index is its decline since 2014, the post-Brexit steadiness and subsequent drop, all of which are masked in the quarterly gyrations of reported GDP growth. “On the basis of the factor’s recent trend, growth seems headed only in one direction -- south,” he said.
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