What's going on?
Fresh survey data out on Monday showed that while US business activity grew at its fastest rate in over five years in November, Europe’s dropped to a six-month low (tweet this).
What does this mean?
These monthly business activity surveys ask business managers how busy they’ve been compared to the month before, which means they give investors a more up-to-date idea of how the economy’s doing than backwards-looking data like, say, economic growth.
US business activity – which jumped by more than expected – put the country squarely in expansion territory, but both the eurozone’s and the UK’s suggested they’re on track for a “double-dip” recession – or two periods of economic shrinkage separated by a brief expansion. The main difference between the two sides of the Atlantic was in how their services industries – everything from hospitality to accountancy – have performed: America’s rose to its highest level since March 2015, even as the eurozone’s shrank for a third month in a row.
Why should I care?
For markets: There’s always next year.
It’s not all bad news for Europe: the part of the survey that gauges confidence in future economic output jumped to its highest level since February. That might have something to do with all the promising vaccine announcements – the latest coming from AstraZeneca on Monday – and investors’ expectations that the European Central Bank will pump more money into the economy. The mood’s high further afield too: British and American business managers haven’t been this optimistic in five and six years respectively.
The bigger picture: Sit down, be humble.
Thing is, this strong US report is at odds with some other measures of the country’s economy. Retail sales data came in below expectations last week, while the number of workers filing for unemployment claims has picked up for the first time in a month. So this is when a conclusive verdict from backwards-looking data might come in handy…