In this briefing:
- Protein, Pork, and Prices
- China: Stimulation in the Right Places
- UK: Labour Market Enduring Political Earthquake
- Understanding Chinese Monetary Policy: Trying Hard to Ease?
- UK: GDP Rebound Crushes Current Recession Fear
A hot topic on blue checkmark Twitter is food prices in China. However, a lot of what we have seen getting relayed is very anecdotal. To that end we are digging into some of the protein pricing data we can find and putting them into our standard graphs. This is food sector data we have not presented before, so let us know if you want to see more of this type of data crunching. This is will also be a two-part piece, proteins today, followed by fruit, vegetables, and grain tomorrow.
What can the world expect from its second largest economy in the near term now that a 2020 recession signal has been sent in the US and the EU seems destined to slip back into a growth paralysis? The good news is that we should expect growth in China to accelerate.
- Headline labour market data were broadly robust in Jul-19 as further upward revisions to wages were joined by a return to the unemployment rate’s 3.8% low.
- The recovery in GDP growth has not stoked employment, which has been steady at a subdued rate amid a normalising labour force level. Falling vacancies still show the risk of a rapid adverse adjustment if there is a no-deal Brexit, as I assume.
- Latest RRR cuts are only tactical and do NOT signal strategic monetary ease
- PBoC liquidity injections are the key monetary signal
- Liquidity jumped from May through July but August flat and September weak
- No indication yet that PBoC easing aggressively….but they will
- UK GDP growth exceeded expectations in July by 0.2pp at 0.35% m-o-m. The rest of Q3 is likely to be broadly flat but deliver growth of 0.4% q-o-q, in my view.
- Soft surveys sensationalised recession warnings after GDP already contracted in Q2. The fall was mostly narrowly concentrated within the Apr-19 industrial data while services growth keeps officially crushing the sentiment-biased surveys.