Independent Strategy

Macro Matters

June 2019

Independent Strategy Blog: Macro Matters
US

12th June, 2019 » Macro Data – US May CPI

Slight downside surprise versus market expectations but really nothing too unexpected.  The underlying inflation story remains moderate short-term disinflation.  There is not much sign the initial raft of tariffs have had much of an effect on consumers, with goods prices a little easier.

China

12th June, 2019 » China May Money & Credit

Money supply growth remains steady.  Credit growth has quickened a touch from April but overall there isn’t much evidence that the governments stimulus efforts have opened the credit spigots, particularly the private sector.  Debt is growing a little faster than GDP again, but not markedly.

Modest improvement in the UK wages story.  But it still appears that nominal gains are topping out with data flattered by the number of hours worked (at 32.2 vs. 31.8 in the same period a year ago).  The stabilisation in nominal growth rates is not necessarily bad news for consumption given that inflation also looks to be moderating again, certainly at the headline level.

China

10th June, 2019 » China May Trade Balance

China recorded a larger than expected trade surplus in May, but mainly due to weakness on the import side rather than any underlying improvement in export performance.

Mirroring the weak ADP figure the May payrolls numbers also surprised on the downside.  Revisions also downward, which also showed up in ADP’s release.  The participation rate was stable, as was the unemployment rate.  Hourly earnings were a little softer than expected and hours worked were flat at 34.4, which is down versus a year ago, dampening gains in weekly wage growth.

April turned out to be another poor month for German industry with the decline in overall industrial production fairly modest compared to the drop on the manufacturing side, where output dropped 2.5% on the month leaving output down 3.4% y/y.

US

5th June, 2019 » US May ADP

For those sensitive to bad data its not a good update.  The May ADP report saw job growth slump to a meagre +27.3k jobs, the weakest outturn since March 2010.  Some sectors seem to have been hit by temporary factors, with the decline in construction particularly notable.  But while this sector can ebb and flow you still have to go back to the end of 2010 to get a worse reading.

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