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Japan Q3 final GDP q/q annualized +22.9% vs +21.4% expected

  
Analysis, Economy

Japan’s third look at Q3 GDP

  • Prelim reading was +21.4% q/q annualized
  • Prior was -28.1%
  • GDP sa +5.3% q/q vs. expected 5.0%, prior -7.9%
  • GDP nominal +5.5% q/q vs. expected 5.2%, prior -7.6%
  • GDP deflator (an inflation indication) % vs. expected 1.1%, prior 1.3%
  • Private consumption +5.1% vs. expected 4.7% q/q, prior -7.9%
  • Business spending -2.4% vs. expected -3.1%, prior -4.7%
  • Inventories cut 0.2 pp from GDP
This is a decent upgrade and a solid surprise.

Japanese October household spending +1.9% y/y vs +2.8% expected

  
Analysis, Economy

Japanese spending and earnings report

Japanese October household spending
  • Prior was -10.2%
  • Spending +2.1% m/m vs +1.0% exp
Labor cash earnings -0.8% y/y

  • expected -0.7% y/y, prior -0.9%

Real cash earnings -0.2% y/y

  • expected -0.4% y/y, prior -1.1%

The headline spending numbers are a bit softer than hoped for but this is the first y/y rise in 13 months.

With Japan set to unveil another stimulus package, it’s all blue sky from here.

Dec Japan Reuters Tankan manufacturing -9 vs -13 prior

  
Analysis, Economy

The Reuters Japan December survey

  • Best reading in 10 months
  • Prior was -13
  • Non-manufacturing -4
  • Prior non-manufacturing -13
Looking at the future indexes. The manufacturing Marc 2021 index was at -5 and non-manufacturing at -4.
These are good numbers and highlight the continuing recovery in Japan. Manufacturing was around -5 before the pandemic so we’re almost square. Non-manufacturing was at +15 pre-pandemic so it has a bit more work to do.
Dec Japan Reuters Tankan manufacturing
Today’s fresh round of stimulus will likely add to the upbeat mood.

Eurozone November final services PMI 41.7 vs 41.3 prelim

  
Analysis, Economy

Latest data released by Markit – 3 December 2020

  • Composite PMI 45.3 vs 45.1 prelim
The preliminary report can be found here. A slight revision higher but it still reflects the sharpest drop in the services sector since May, as tighter virus restrictions across the region weighed on economic activity.
The sharp contraction in the services sector was particularly notable in France, Italy, and Spain while the decline in Germany is offset by the robust manufacturing performance.
Markit notes that:

“The eurozone economy slipped back into a downturn in November as governments stepped up the fight against COVID-19, with business activity hit once again by new restrictions to fight off second waves of virus infections.

“However, this is a decline of far smaller magnitude than seen in the spring. Unlike earlier in the year, manufacturing has so far continued to expand, buoyed in part by recovering export demand, and the service sector is also seeing a much shallower downturn than during the first lockdowns.

“The relative resilience of services in part reflects spill-over demand from the manufacturing sector for transport and other industrial support services, but also reflects the looser lockdown measures compared to those seen earlier in the year. “The fourth quarter will nevertheless likely see the eurozone economy take another major step backwards, with especially steep downturns suffered in France, Spain and Italy.

“Encouragingly, growth expectations have lifted higher, as vaccine developments fuel optimism that life can start to return to normal in 2021. It’s anticipated that business and consumer spending will start to rise as the outlook brightens, though a high degree of caution is expected to persist for some time to come.”

China Caixin/Markit PMIs Services 57.8 & Composite 57.5 for November

  
Analysis, Economy

These are the results of a privately-conducted survey, which differs to the official survey (in a nutshell this one leans more towards smaller sizes firms)

Services jump to 57.8

  • expected 56.4, prior 56.8
Key points highlighted by IHM / Markit:
  • Substantial rise in business activity amid quickest increase in new work since April 2010
  • Employment growth strongest since October 2010
  • Input costs rise at sharpest pace for over a decade
Composite no slouch, to 57.5

Australia GDP for Q3 3.3% q/q (vs. expected +2.5%)

  
Analysis, Economy

GDP (sa) 3.3% q/q  for a BEAT

  • expected +2.5%, prior -7.0%
 and -3.8% y/y
  • expected -4.4%, prior -6.3%
A (relatively) subdued bounce out of lockdown, not as substantial as many countries have seen. Australia has lagged with 20 % (approx) of the economy still locked in a shut down for much of that quarter due to the resurgence of COVID-19 cases in Melbourne and Victoria.
Economic growth data for Australia for the July to September 2020 quarter. 

FT: Janet Yellen calls for action to prevent US economic ‘devastation’

  
Analysis, Economy

Yellen is ex-Chair of the Federal Reserve System and incoming US Treasury Secretary once President-elect Biden takes the helm.

Via the Financial Times:
  • warned of “more devastation” in the economy if the US failed to address the fallout from the pandemic
  • disproportionate toll on low-income families
  • an “American tragedy” that needed to be quickly tackled.
Link is here for more (may be gated) .
Yellen is ex-Chair of the Federal Reserve System and incoming US Treasury Secretary once President-elect Biden takes the helm.Yellen was replaced as Fed Chair by Trump.

Switzerland Q3 GDP +7.2% vs +6.0% q/q expected

  
Analysis, Economy

Latest data released by the Federal Statistics Office – 1 December 2020

  • Prior (Q2) -8.2%; revised to -7.0%
  • GDP -1.6% vs -3.4% y/y expected
  • Prior -9.3%; revised to -7.8%

The good news is that the Swiss economy bounced back more than estimated in Q3 but that is more than offset by the virus resurgence and its impact on the economy in Q4, which is the market focus at the moment (alongside Q1 2021 and vaccine optimism).

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