In the US, new economic data released in the past two weeks continues to indicate a solid economic recovery. Both the Chicago Business Barometer and the ISM Manufacturing PMI remain well above the crucial level of 50 (above 50 indicates expansion). The ISM Manufacturing PMI reading of 57.5 in November was its seventh month of being above 50 and readings in the high 50s indicate strong expectations of expansion. Purchases of homes in the US jumped by +20.2% year-on-year (YoY) in October. Construction spending increased by +1.3% month-on-month (MoM), while the unemployment rate dropped to 6.9% in October, beating expectations. To put that in perspective, the jobless rate remains almost twice its pre-pandemic level of 3.5%, but the jobs market is recovering faster than expected. We could see some short-term slowing in US economic indicators into December-January with the ‘second wave’ of COVID impacting activity, but these data at least for now are positive and indicate the US economy is primed to recover from the pandemic as restrictions on activity are lifted.
Like the US, China is continuing to see a flurry of positive economic data. China’s official manufacturing PMI rose to 52.1 in November, beating market expectations. This marks the seventh straight month of growth in factory activity, and some of the strongest data since 2010. The official manufacturing PMI, which largely focuses on high-end, state owned firms, showed that the sub-index for new export orders stood at 51.5 in November. This bodes well for the export sector, which has benefited from strong demand for medical supplies and electronic products. Meanwhile, the official non-manufacturing PMI rose to 56.4 (the fastest increase since June 2012) in November as domestic consumer confidence grows. China remains a much-needed bright spot for the global economic recovery.
Disclaimer: The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Capital Strategies Limited or its related companies. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.
