World: Ratio of global Industrial Production to trade volume at 7-year low - NBF

National Bank of Canada analyst Krishen Rangasamy explained that the ratio of world IP to global trade reached a 7-year low after trade volumes expanded sharply in Q1 leaving producers with lean inventories. 

Key Quotes:

“The world economy continued to expand in Q1, albeit at a slower pace. Latest data from the CPB pointed to a deceleration in world industrial output growth during the first quarter (+2.7% annualized based on results for the first two months of the year) as an acceleration in emerging markets was offset by softer growth in advanced economies. Global trade volumes continued to rise in Q1, outpacing industrial production for the third consecutive quarter."

“The ratio of world industrial production to global trade volumes, a proxy for world inventories, sank to a 7- year low. That bodes well for restocking and hence production in subsequent quarters, although it’s also possible producers opt to delay inventory rebuilding until the ongoing wave of protectionist threats subside.”