US Shops, China Drops

US beats China on economic data

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What's going on?

Ding ding: this round goes to the US. Data released on Friday showed America’s economy punched ahead in November, while China’s was comparatively hobbled.

What does this mean?

US retail sales in November grew by 4% more than a year ago, above expectations, helped by a blockbuster Black Friday and Cyber Monday. And the amount made by US goods-producing facilities in November (a.k.a. its “industrial output”) also increased more than anticipated: it was nearly 4% higher than last November, partly stoked by cold weather boosting activity at utility companies as frosty Americans turned up the heat.

China, on the other glove, had higher November retail sales growth than America, at over 8% – but it was lower than economists predicted. Ditto for the country’s industrial output: it was 5% higher than last November’s but below expectations. But rather than settle in for a cold winter, Chinese officials are already planning to reheat the country’s economy.

Why should I care?

For markets: America slows China slows America.

China’s economy is important to the US and vice versa. Last year, more than a fifth of America’s imports came from China. That number may turn out to have fallen in 2018: China’s exports grew at a slower-than-expected rate in November. And the country’s domestic consumer spending is slowing too, which could result in less demand for US products and weigh on American economic growth (last year, 8% of the US’s exports were China-bound). The merry-go-round of potentially slowing growth in both countries could’ve been what led investors to sell stocks globally on Friday.

The bigger picture: Some progress on the trade front.

Since the US and China managed to put a temporary pin in it earlier this month, China’s started buying more of America’s soybeans – which should help balance the amount the countries spend on goods from each other. On Friday, China confirmed it’d (at least temporarily) lower import taxes on US-made cars from 40% to a more standard 15% – good news for German automakers BMW, Daimler, and Volkswagen, which manufacture Stateside and contribute over 60% of car exports from the US to China.

Originally posted as part of the Finimize daily email.

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