What's going on?
Official US manufacturing data released on Thursday showed a sharp slowdown in growth during December, sending shivers through financial markets.
What does this mean?
A survey of industrial businesses showed levels of manufacturing activity relative to the month before grew the least in over two years – much worse than had been expected. The writing may have been on the factory wall, however: regional manufacturing data released earlier this week also highlighted dramatic drops in growth, with some areas even posting declines.
Nationally, things are still expanding in the US for now. But with trade war still raging unabated, and Chinese demand for American goods waning, it’s hard to see things improving…
Why should I care?
The bigger picture: December was a quiet month for workers of many lands.
Manufacturing data out of China and Europe this week also flagged little, if any, growth. Soon-to-be renewed US-China trade discussions are all-important for the fate of manufacturing and the global economy in 2019, with their outcome also having an effect on interest rates. While the US central bank recently raised rates, it suggested it would slow down further hikes in 2019. It may even leave rates unchanged this year; but if economic growth worsens, the increased chances of a cut (which, according to the Financial Times, already stand at 30%) could really spook investors.
Zooming out: Business as usual in pharmaceuticals.
2018 was a great year for mergers and acquisitions – the third-highest on record, in fact – and pharmaceutical companies, at least, are continuing the party in 2019. The US’s Bristol-Myers Squibb announced on Thursday that it would acquire rival Celgene in a $74 billion deal (tweet this) as it doubles down on creating new cancer- and disease-fighting drugs – much like GlaxoSmithKline. But the market isn’t so sure about the move: Bristol’s shares fell 13%, as there’s a risk it misses punchy targets of instant profit growth and $2.5 billion in cost synergies by 2022.