Data day

Posted by: Paul Donovan

07 Feb 2020
  • German trade and production data starts off the day. Consumer demand for German exports should remain strong (helping trade with Europe and the US). Investment demand for German exports is likely to remain weak with trade tax uncertainty persisting. This will also affect production data, which is likely to stay negative.
  • French production is less focused on investment goods. There was a reason US President Trump targeted champagne and porcelain napkin rings in the last anti-French tariff list (the inclusion of Edam cheese remains something of a mystery). Production should be supported by global consumer demand, though strike action in France may distort.
  • The US employment report should show a still strong labor market. There seems to be selective spare capacity (older workers returning to work, for example). Remember average hourly earnings are not wages, and household incomes should continue to be supported.
  • Fear of the coronavirus appears to be fading outside of Asia (it was never that significant to begin with in the US and Europe). As GDP measures economic activity, China's GDP will be significantly hit in the near term. There is little reason to suppose fear will hit GDP elsewhere (although supply chain disruption might).

Explore more CIO Daily Updates