Independent Strategy

Macro Matters

August 2021

Independent Strategy Blog: Macro Matters

Another month of strong payroll gain, the headline number showing a net gain of 943k jobs (mkt 870k) while revisions also shifted upward (a net 146k added for the past three months).  703k of the July gain came from private payrolls (mkt 700k).  Manufacturing added 27k jobs and government 240k, accounting for all of the surprise.  Labour participation edged up to 61.7% which left the unemployment rate at 5.7% (down from 5.9% but above the 5.4% median guess).  Prime age participation (25-54) saw a further surge, for both male and female workers.  This is a positive trend and reinforces our lack of concern for labour scarcity.  It’s important to contrast this with the post-GFC period where prime participation continued to fall after the initial crisis.

Google activity data through to 31st July continues to paint a broad picture of resilience, with limited impact from the increase in Covid cases.  Even in the economies in our group that have been most impacted by the Delta surge, the effect on activity has been pretty limited and economic activity continues to improve.

Global daily new infections increased 7% (after 8%) in the latest 7 days.  Total active cases rose by 8% for the second week.  These are not the exponential increases one would expect if Delta were going to blow the top off the lid of the global economy.  The drivers were developed economies (EU, US and Japan) and SE Asia.  Global fatalities per day fell from 10k to 9k.

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