U.S. stocks are trading flat in early trading on Thursday morning after three consecutive days of gains this week, boosted from rising crude oil prices and some recent dovish sentiment from central banks in Europe, Japan, and the United States.
A decision early this week by Saudi Arabia, Qatar, Venezuela, and non-OPEC member Russia to freeze output at January levels has helped to stabilize crude oil prices although the group of oil producing nations fell short of making production cuts.
Earlier this morning, manufacturing data from the Philadelphia Fed Index showed continued weakness and remained in contraction for the 6th consecutive month while initial jobless claims this week fell more than expected.
Manufacturing contracted -2.8 in February, slightly above the consensus estimate of -2.9 percent from briefing.com and below the -3.5 percent drop in January.
Initial jobless claims fell to 262,000, below the consensus estimate of 274,000 from briefing.com
French based OECD provided a new economic outlook that shows the world economy is likely to expand no faster in 2016 than in 2015, its slowest pace in five years, while citing slowing investment and sluggish demand that is leading to low inflation and inadequate employment and wage growth.
“Global growth prospects have practically flat-lined, recent data have disappointed and indicators point to slower growth in major economies, despite the boost from low oil prices and low interest rates,” said Catherine Mann OECD Chief Economist.
“Given the significant downside risks posed by financial sector volatility and emerging market debt, a stronger collective policy approach is urgently needed, focusing on a greater use of fiscal and pro-growth structural policies, to strengthen growth and reduce financial risks” Mann added.
OECD lowered their global economy growth projections to 3 percent from long run averages of 3.75 percent.
The U.S. will grow by 2 percent this year and by 2.2 percent in 2017 while the euro area is projected to grow at 1.4 percent rate in 2016 and 1.7 percent in 2017.
While noting that China’s economy is in the process of rebalancing, China’s GDP growth is forecast at 6.5 percent in 2016 and 6.2 percent in 2017.
Brazil’s economy is expected to contract by 4 percent this year and begin to emerge from the downturn next year.
OECD stands for Organization For Economic Cooperation And Development, an international organization consisting of 34 countries, founded to stimulate economic progress and world trade.