The past week hasn’t really seen any substantial shifts in activity, even if it’s increasingly clear that we’re past the worst as Covid cases continue to decline globally and the first signs of the vaccine impact start to percolate into the data. In the overall rankings, it is the Europeans that remain the most depressed compared to pre-pandemic levels of activity, with the UK languishing at the bottom of that league. Germany and France took a step back based on the data, while there was a further mild improvement in Spain and Italy.
Macro Matters
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With the continued decline in new reported Covid cases globally, it is no surprise that we’ve started to see an improvement in overall activity levels. At least based on the Google data. Indeed, all but one of the countries in our sample recorded a week on week improvement. The worst was France and that was simply stable. Europe remains at the bottom of the pile in terms of overall activity, but the corner has certainly been turned and we’d expect to see this pick-up to extend and accelerate over the coming weeks.
Chart pack and analysis attached.
January’s Chinese credit numbers were rather robust and some way ahead of expectations. But this is the pre-Chinese New Year period where things can be a little less predictable and should be really taken together with February’s readings. And then we’ll have the added problems of adjusting for the impact of Covid last year.
Vaccination doses administered continue to rise by more than 30% a week. But still less than 10% of the population of rich countries have received a shot and less than 2% globally. The US and UK lead with 13% and 19% with the EU at 4% of people having had at least one shot. People who have been completely inoculated are still low — less than 2% globally — 1% in the EU, 0.75% in the UK and 2.77% in the US.
Another week of relative stability as measures to contain the pandemic remained static in most places. More draconian restrictions in Europe leave the region at the bottom end of the spectrum while EMs and Asia rate far better.
Chart pack and analysis attached.
Covid-19 vaccinations rising at a rate of around 40% per week. Not much difference between EU 38%, UK 30%, US 36%. Odd given vaccine wars! The percentage of the population vaccinated at least one time now stands at 1.2% globally, EU 2.7%, US 8.4%, UK 13%. While this is rising fast, this is still way short of herd immunity. And the percentage of the population fully vaccinated is still very low — less than 1% of the population everywhere except the US, Israel and a few small states (UK 0.7% and EU 0.4%).
Economic activity seems to be bedding down in the doldrums amid lockdowns and other varying restrictions on activity. Europe continues to suffer the most, although weak activity remains a broad phenomenon.
Chart pack and analysis attached.
Vaccinations have continued to rise exponentially up 50% between Jan 17 and Jan 23 from 40.6mn to 61.1mn. 2% of Europe's population (UK 9.3%) and 5.8% of the US's have received one vaccine dose. For Asia the figure is 0.5% and China 1.04%. The number of fully vaccinated people has risen globally from 2.7mn to 4.9mn. In Europe the % of the population fully vaccinated is 0.11% (UK 0.69%) and in the US 0.84%.
The noise of the holiday period might have overstated the extent of the decline in economic activity but there is no doubting that the backdrop remains very depressed. Lockdowns and other restrictions remain the driver of this, with Europe bearing the brunt of the hit. But high levels of Covid infection continues to dampen the economy even in places where efforts to tackle the virus are less draconian.
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As we move into 2021, we are getting a clearer picture into the extent of the slowdown in economic activity that the resurgent Coronavirus has triggered. Although the Google mobility indices were already indicating a sharp deterioration, the scale of the decline reported through to the turn of the year was exaggerated by holiday effects, as we noted last time. Data through to the 8th of January, which was released yesterday, gives us a clearer picture of how things stand. And while it is not quite as bleak as over the Christmas and New Year period, the data still paints a fairly poor picture of global economic health.
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December Non-farm payrolls recorded a -140k drop, quite a bit below the markets +71k guess. This takes the 3m average down to +283k. Private sector payrolls were a little better than the headline print at -95k, helped by manufacturing which added +38k jobs while the decline in government moderated to -45k. That was still the fourth consecutive decline but is largely census related. Despite the headline miss revisions were very positive, +91k in November alone
December saw a further solid increase in Chinese FX reserves, the headline holdings number rising US$38.03bn m/m to US$3,216bn. Again more than half of the rise can be attributed to valuation adjustments as the US dollar continued to depreciate against the balance of the PBoC’s reserve holdings.
The re-acceleration of Covid infections has hit mobility hard over the past two weeks. Although there are clearly seasonal factors at work (which the Google data series do not account for), we’ve clearly seen a pronounced deterioration in both mobility and economic activity above and beyond what could have been normally expected. This has been concentrated in Europe, with a particularly severe drop in Germany where our economic activity measure suggests things are even worse than at the peak of the crisis last April. Italy and the UK have also registered steep falls, while Spain and France have seen more modest drops.
Chart pack and analysis attached.
