Output lags consumers

Posted by: Paul Donovan

30 Jun 2020

Daily update

  • May industrial production data from South Korea and Japan fell. This is to be expected. Consumers will recover earlier than production, and will be consuming inventories as lockdowns ease. Long and complicated global supply chains will take longer to restart. This means that while consumers are spending in late second quarter, the GDP data (measuring what things are made) will show more gains in the third quarter.
  • French and Italian price data is due (consumer and producer prices). There is too large an element of guesswork in price data today to make the numbers especially useful. The story is that while there will be lots of relative price changes, the general level of price inflation is likely to be lower rather than higher, given spare capacity.
  • Bank of England Chief Economist Haldane is due to speak on the impact of the virus on the economy. The chances are that Haldane will say the impact is not good. Markets are more interested in signals for future policy.
  • The US has put in place restrictions on some technology exports to Hong Kong. China's National People's Congress has passed the national security law, which investors expect will produce a further US response.

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