Brief Macro: UK: Labour Market Enduring Political Earthquake and more

In this briefing:

  1. UK: Labour Market Enduring Political Earthquake
  2. Understanding Chinese Monetary Policy: Trying Hard to Ease?
  3. UK: GDP Rebound Crushes Current Recession Fear

1. UK: Labour Market Enduring Political Earthquake

2019 09 10%20lab4

  • 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.

2. Understanding Chinese Monetary Policy: Trying Hard to Ease?

Smartkama

  • 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

3. UK: GDP Rebound Crushes Current Recession Fear

2019 09 09%20mgdp2

  • 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.

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