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Macro Matters

Macro Category

Independent Strategy Blog: Macro Matters

Total global vaccinations rose 11.8% or by 260mn – roughly stable on the week.  Vaccinations per 100 of the population is now above the critical 30 level in all regions except South Asia (India 20), Russia (24) and Africa (3).  Share of population fully vaccinated: world 10%, EU 24%, US 45%, UK 46%, South America 11%, Asia (ex China, which does not report) 7.9%.

Google mobility indices show a further and broad based improvement in the week to June 12th.  Global economic has all but recouped its post-Covid losses, but mobility is still some distance behind (a deficit of ~17% based on the data), although the trend here remains an improving one too.

Working through the latest Google mobility update (through to 5th June) you get an increasing sense of normality.  Although most places are still showing activity levels below where they were pre-pandemic, the gap looks pretty small and momentum remains strong.  Of our survey group four recorded w/w declines but really this is part of the ebb and flow rather than anything more sinister going on.  Even India has managed to move higher as the recent Covid wave there continues to abate.

While the US added 559k jobs in May according to the non-farm payrolls report, this marked another downside surprise for the series where the median estimate was up at 650k.  There was a modest upward revision to the April numbers (278k vs. 266k initially reported) but that doesn’t move the needle.  Private payrolls growth came in at 492k while manufacturing payrolls added 23k job and government 67k.  The unemployment rate dropped to 5.8% from 6.1% but this was aided by a decline in participation (61.6% from 61.7%).

The latest Google mobility update (through to 29th May) continues to show strong progress towards normalisation of the global economy. Of our survey group only three (23% of sample) recorded a w/w decline in activity and all of this was in places that shouldn’t really be a cause for concern. And the most notable victim of the virus (India) has finally managed to bounce. We also saw upticks in Japan, where an increase in cases had also worried.

The latest Google activity figures (through to 22nd May) continue to support the strong global recovery narrative with the latest improvement being driven by ongoing gains in Europe.  Indeed France and Germany led the increase in activity last week, with Italy, Spain and the UK also in our top group (alongside Russia).  Mexico, Australia and the US recorded small gains too.

In the last 7 days: Global Daily Infections fell 19.6% and the RO/RE rate has fallen to 0.79 from 0.89 and 1.36 nearly a month ago.  This level of RO/RE indicates a waning pandemic.  Daily infections fell in all regions except Latin America and Asia.  In India daily case fell from 341k/day to 263k/day.

On a global basis the latest Google activity figures (to 15th May) show a further modest improvement in the recovery rate, maintaining the solid uptrend we’ve seen since the start of the year.  Obviously we’ve seen setbacks in certain places, the most extreme case being India, but this hasn’t been enough to move the global needle.

The headline non-farm payrolls jobs figure surprised on the downside in April, with 266k jobs created versus the median forecast of 978k.  And the March figure was also revised downward by 146k.  Obviously, it was private payrolls that disappointed (+218k vs. 893k survey) while manufacturing jobs contracted slightly (-18k).  Government couldn’t make up for that but did offer a +48k contribution.  The unemployment rate actually ticked back to 6.1%, a result of the 0.2% pt improvement in participation and the work week ticked up again.

Analysing the weekly vaccinations data some things stand out:

  1. Daily infections are falling everywhere except in South Asia (+18% on the week to 384k/day).
  2. EU daily infections are down 19% for last week (vs. previous seven days).
  3. Global vaccinations are up 14% on the week. Some signs of vaccine fatigue in the US (+8%) & UK (+6%).
  4. The EU crossed (what I think is a critical) threshold of 30 vaccinations per 100 population with 33. Share of the population with 1 shot or more is 24% up from 21%.

During lockdown people shopped online.  Not all needs could be met online.  So pent up saving grew to 4-8% of GDP most places.  Now it is expected some of the pent-up savings will be spent as Pandemic declines in rich countries.  It may be more in the EU than expected.  Because it is harder to shop online in the EU.  So pent up demand may be greater.

Post-Easter recovery has gathered pace with a substantial improvement in European mobility and economic activity over the past week (to 17th April).  The rebound was fairly even across Germany and Italy, with a more modest improvement in Spain, although that comes from a substantially better starting position.  France also saw a pick up in activity, but given higher Covid case loads this was modest in comparison.  And with the UK lockdowns easing France now carries the mantle of the weakest of our survey group, a position it looks set to retain for a while.

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