Global Economics – September 18, 2020
Rebound from the shut-down lows of the Spring may be easing in the global economy; growth is still on the rise but at a generally slowing rate. The Federal Reserve moved to head off slowing in the US recovery by vowing to keep monetary policy in maximum overdrive until “maximum” employment is reached (what would be a very long-term goal given Covid’s massive hit on the US labor market). But a major positive for the outlook is coming from China whose growth rates, in some contrast to the US, may be improving.
The Global Economy
Supply and demand
The pitch of improvement is modest but perceptible in China’s economic data with industrial production, benefiting from comparative export strength, continuing to lead the way, up solidly in August for year-on-year growth of 5.6 percent and an 8 tenths gain from July.
August saw strong gains for steel production, utility output, as well as mining which, in contrast to many other countries, is up 1.6 percent on the year and out of contraction. Retail sales are also now out of contraction, up 0.5 percent in August versus July’s minus 1.1 percent. This is the first plus showing for annual retail sales this year for China, which of course was hit first by the virus. Leading August’s gains were home appliances, offering a sign of discretionary demand.
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