Eurozone Growth
Those productive Germans have for the second month been less productive it turns out in December which was a surprise to the pointy heads deputed to monitor EU stats. The story is as follows: the German services sector remains relatively resilient but manufacturing output has declined. At present the French economy is doing the opposite of Germany’s by surprising on the upside in the manufacturing sector but there are storm clouds approaching for France’s economy due to the lack of a functioning government and the fear of resurgent inflation. What that adds up to is that slowing growth in the two main Eurozone industrial economic engines is threatening to slow the whole EU growth picture. However, the EUR/USD remains at this point at least, strong.
EUR/USD 1.1775.
China Growth
In addition to EU growth being under threat, it would look as if China’s economic growth is also slowing despite strong manufacturing figures. Retail sales growth for November has slumped to 1.3% from 2.9% a month earlier in October. This is largely due to the expiry of the new for old policy engineered by the Chinese government which administered a significant jolt to China’s beating economic heart. That meant that consumers could trade in old goods for new ones and snag a discount. To illustrate that, sales of household appliances fell almost 20% from the stats a year earlier at the height of the new for old policy. What these figures suggest is that manufacturing output is an outlier and the slowdown in China is both broad and deeper than previously envisaged.
GBP/USD 1.3420.