- Conflicting data from the US
- China sees slump in April
- Europe awaits the PMIs for May
US - some promising signs
This week brought very contradicting data from the US economy. On one hand we got an awful data on retail sales and industrial output – the two very important monthly reports that showed the economy had a very poor start to the second quarter and may register a much lower growth than 3.2% from Q1. Then again early regional business surveys from New York and Philadelphia showed a strong rebound of economic activity in May. These are just 2 regions but one might see that the correlation (and in some cases even anticipation) with nationwide ISMs (these in turn are good predictions of economic growth) is strong. Normally that would be a good sign – even as interest rates are higher and tax cut effects start to fade that would suggest the US economy remains resilient. Unfortunately these green shots might be quickly derailed by tariff impact and related business uncertainty.
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If not the tariffs, one could now be more optimistic about the outlook for the US economy. Source: Macrobond, XTB Research
Asia – China slumps again in April
There was a lot of hope for economic recovery in China after the March series of data but those hopes were seriously dashed this week. Data showed a strong reversal in demand and production growth and although China quickly declared more stimulus the concerns are this will be way too little to offset any impact of US tariffs.
Unlike in Europe, there was no recovery on the Chinese equities and poor data helps explain why it was the case. Source: xStation5
Europe – what the PMIs will show?
Europe enjoyed the US decision to delay tariffs on auto imports – if introduced these could quickly drive the continent into recession. That’s a great news but the European industry has been very close to recession recently anyway. Has that changed in May? We will learn more next Thursday when the PMIs for May will be released. Circle that day in your calendar.
