Independent Strategy

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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

POST » 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

POST » 17th September, 2019 » US August Industrial Production

Better than expected bounce in August industrial production, although it doesn’t look so flattering in y/y terms with the growth rate (if you can call it that) slowing further to just 0.36%. And that includes a +0.68 contribution from energy.  Manufacturing in other words is contracting, registering a drop of -0.44% y/y.

UK activity data for May somewhat better than expected, but this is largely due to volatility as industry juggled with the initial March Brexit data and resulting slide in production in April, notably the pre-planned auto sector shutdowns.  The underlying picture is still one of weakening activity

A weak industrial production number and even bleaker manufacturing figures, which leave the y/y rate in negative territory for the first time since December 2016 (and the last China crisis!)  On the manufacturing side non-durables look weak while autos within the durables continue to drag with auto production running around -4.4% y/y now, maintain the negative streak from the start of the year.

The improvement we saw in the headline activity numbers in March proved short lived with both industrial production and retail sales taking a renewed dive in April.  Auto sector weakness was notably pronounced.  Passenger car unit sales are down some 11% from the June 2018 peak, which is unprecedented in a developing economy with a reported growth rate as that of China.

UK

POST » 10th May, 2019 » UK March Sector Output

March output data was strong on the manufacturing side, amid inventory building ahead of the (since extended) end-March Brexit deadline.  Construction and services ended the quarter on a weak note, leading to an overall dip in GDP in the final month of Q1.

This morning completed the March industrial production and orders reports for Germany.  Although the m/m bounce in industrial production extended, the prior month’s downward revision took some of the gloss off this and the y/y comparison still looks gloomy.

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