What's going on?
Fresh survey data out on Monday showed that the manufacturing industries in the US, UK, and eurozone were on the up, but that wasn’t exactly the whole story…
What does this mean?
These monthly surveys ask purchasing managers in the manufacturing industry how busy they’ve been, and they give investors a feel for economic activity as a whole. Last month, US and eurozone managers were busier than economists had predicted, and while the UK’s weren’t quite as busy as forecast, all three readings pointed to growing economies – a nice change of pace from the dramatic shrinkage we saw last quarter.
Still, consumer spending is the biggest contributor to the US, UK, and eurozone economies, and that predominantly affects the “services industry”, whose data isn’t released until later this week. Investors, then, will probably want to take manufacturers’ early updates with a pinch of salt…
Why should I care?
The bigger picture: The government’s coming. Look busy.
Survey data – or “soft data” – can help economists make forecasts about “hard” data, like economic growth figures. But seeing as it may be in respondents’ interests to sound busy, some investors have started to doubt how meaningful the surveys are. And going by hard data alone, debt rating agency Fitch reckons the US’s finances are in so much disarray that it might soon declare the purchase of American debt a riskier proposition.
For markets: Deals, deals, deals.
While US lawmakers are still trying to decide what the next phase of economic support looks like and how much to spend, the eurozone’s agreement now has the bloc on the right course. As for the UK, that’s a whole can of worms: the country needs to strike trade deals around the world before its European Union-affiliated deal expires next year. The most important among them appears to be with the US: the UK banned Huawei, and now it might soon do the same to TikTok to maintain its special relationship.