Independent Strategy

Macro Matters

Google activity data through to 5 December continues to paint a solid picture of the recovery, with no sign that the appearance of the Omicron variant is restraining either mobility or economic activity.  Most of our sample saw improvements week-on-week, led by US activity which reverted to trend post-Thanksgiving.  Only Russia and South Korea saw a dip, moving our total global measure back to its highs.

A surprisingly soft November non-farm payrolls report, but the devil is in the detail.  Non-farm employment rose 210k (mkt 550k) while private sector jobs growth came in at just 235k (mkt 530k).  Manufacturing payrolls added 31k jobs while government lost another 25k, their fourth consecutive decline.  The revisions upward at least, but not quite at the pace of the past 12-months.

Google mobility figures through to 28th October looked solid.  While we’ve seen rising Covid cases in Europe the impact on mobility and economic activity has been fairly well contained to date.  Indeed, Germany, France and Spain recorded improvements week on week while Italy saw a very mild dip.  The largest drop was recorded in the US but this is merely an effect of the Thanksgiving holiday which are not adjusted for in the raw data.  The drop was comparable to the decline we saw in this period last year. EMs all looking good.

The Google mobility data, through to 7th October, suggests activity has taken a bit of a stumble, with only two of our sample group (the UK and Australia) showing any improvement over the past week.  The standout decliner was again Russia again, which is in something of a localised freefall at the moment.  But we’d downplay the weakness seen in the rest of Europe, the last week of October being a seasonal weak spot due to mid-term school breaks (note the data is not adjusted) and, like the UK the week before, we should see a bounce in the next update.  If we don’t then worry, but not until then.

October has delivered a more robust payrolls report, non-farm employment rising 531k (mkt 450k) while private sector jobs growth hit 604k (mkt 400k).  Manufacturing payrolls were particularly strong, with a 60k gain while government jobs dropped for a third consecutive month, -73k.  The revisions were also strong (September revised up from 194k to 312k and August was also revised higher.  The average monthly revision is now running at 68k for the past 12-months.

The updated Google activity data, through to 31st October, remains encouraging. Bar Russia the picture improved across our pool versus the prior week with Mexico, Germany and India leading the pack. In terms of the breakdowns we saw a solid increase in economic activity, while mobility dipped or was flat. This was particularly visible in Europe and is partly seasonal with mid-term school breaks leading to a dip in mobility in some places. EM trends seem to be generally better than DMs, bar Russia. That is partially due to the persistent stagnation in the US indices, which damper the overall DM storm, Europe and DM Asia all looking solid.

The updated Google activity data, through to 9th October, continues to paint a picture of general resilience.  Even in places like the UK, which have been subjected to disruptions (specifically fuel shortages) have held up, with barely a blip in the mobility numbers nor overall economic activity.  Indeed, the biggest decliner across Europe over the past week has been Germany, and really that is relatively mild and comes off very strong levels.  Italy, Spain and France all ticked down too.  At the top end of the scale we saw further improvements in EMs, led by India and Brazil while Japan also continues to recover from its summer soft patch.  The US is as ever static, having been that way since late spring really.

We’ve seen a further deceleration in the pace of employment growth, the September non-farm payrolls report showing just 194k jobs were created in the month, down from an upwardly revised 366k in August and well below the consensus guess of 500k.  Despite the glut of job openings there was a further decline in the participation rate too, down 0.1% pts to 61.6%, which is unchanged from a year ago.  That contributed to another steep fall in the unemployment rate, U3 down to 4.8% from 5.2% and U6 to 8.5% from 8.8%.

Google activity data through to 25th September looking a little softer.  There are some tentative signs that economic activity is starting to slow in certain places, although by and large it’s outperforming mobility by a margin.  Europe was broadly softer compared to the prior period, with the exception of the UK, which was actually up a little bit.  But don’t expect that to last amid fuel disruptions which will enter the data next week.

Google activity data through to 17th remains positive, with none of the anxiety present in markets transmitting into the real economy while all the fuss about the Delta variant also seem to be having minimal impact in the real world – a function of the hugely successful vaccine programmes that continues to rollout globally and has reached effectively full coverage in nearly all of the major economies.


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