Independent Strategy

Macro Matters

October 2019

Independent Strategy Blog: Macro Matters

While China’s 3Q GDP number was a little lower than expectations at 6.0% y/y the monthly production and activity series for September all improved.  Retail sales growth picked up to 7.8% y/y from 7.5% while industrial activity rebounded to 5.8% y/y from 4.4% in August.  Investment was perhaps the one area of disappointment, growth slowing to 5.4% y/y despite a further modest pick up on the State Owned side.

US

17th October, 2019 » US Sep Industrial Production

US industrial activity disappointed again in September, with output down -0.4% m/m.  Although there was some better news in August, with production from then revised upward a little bit, the underlying trend remains weak.  Manufacturing is still the focal point with the declines we’ve seen in non-durables spreading to durables this month.

US

16th October, 2019 » US September Retail Sales

The headline numbers might have missed expectations, with retail sales falling across most measures month to month.  But this is really some giveback after better figures over the summer, including upward revisions to the August numbers.  This is reflected in the firming of the y/y trend we’ve seen, underlying growth looking far stronger now that it was at the start of the year.

UK

15th October, 2019 » UK August Employment & Wages

UK employment market continued to soften over the summer, recording another rise in the claimant count.  This is unsurprising given the Brexit related uncertainty and generally slower global growth environment.  Employment growth slowed, particularly for male workers and the participation rate has dropped back.

China

14th October, 2019 » China September Trade

China’s trade balance continues to improve, a function of persistent weakness for imports which again outweighed soft, if patchy, export demand.  The locus of the export demand problem remains the US which is being offset by ongoing growth from the Eurozone and parts of Asia, the exceptions being Japan, South Korea and Hong Kong, which have continued to contract.

Perfect jobs number for the optimists.  While the headline rate was a bit below expectations upward revisions took the edge off the weak August and to a lesser extent July numbers.  Meanwhile the unemployment rate fell further, from 3.7% to 3.5% while the U6 rate fell to 6.9% from 7.2%.  But look a little deeper and things don’t look quite too hot.

US

2nd October, 2019 » US September ADP

Another weak ADP number, both for the current month but notably also the sharp downward revisions to the August release.  The private sector survey suggested 135k jobs were added last month from a downwardly revised 157k in August.  If we compare Q3 job creating this year to last year the total has slowed from 642k to 434k, t’s quite a drop.

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