Rising political uncertainty tends to dampen business confidence
Major political uncertainties such as Brexit and trade disputes have tended to depress business confidence. We hope to see the resolution of some of these uncertainties later in 2019.
Sources: Wells Fargo Investment Institute, Markit, Bloomberg, and Baker, Bloom and Davis. Monthly data from January 31, 2006 to April 30, 2019.
Global economic slowdown periods defined by the Organisation for Economic Co-operation and Development (OECD). Policy uncertainty is represented by the Global Economic Policy Uncertainty Index produced by Baker, Bloom and Davis. It measures changes in news coverage about policy-related economic uncertainty, tax code expiration data, and economic forecaster disagreements. Business confidence measures the share of global manufacturing purchasing managers’ indices (PMIs) in expansionary territory (above 50). A PMI is a measure of dominant trends in manufacturing and is considered a leading indicator of economic activity.