Early hikers, NFP revisions and aggressive asset allocation
This week’s charts cover the following data:
The world’s “early hiker” central banks mostly dodged a recession
When inflation alarm bells started sounding in 2021, some countries – mostly emerging markets – acted more quickly than others. Some hiked rates a year earlier than their developed-market peers did.
This heatmap examines nine of these countries, gauging how they have fared since becoming “early hikers” and whether they have avoided recession.
We chose several criteria: 1) whether the average quarter-on-quarter annualised GDP growth for the past two quarters is below zero; 2) whether unemployment grew by more than 0.15 percentage point over three months; 3) whether the three-month moving average of manufacturing PMI is below 45; and 4) whether average quarter-on-quarter annualised industrial-production growth is below zero for the past two quarters. Wherever these criteria are met, the values have a red background shading.
Most of these economies appear to have been robust enough to absorb the tightening by inflation-hawk central bankers. Only Hungary faces a likely recession.?
Repeated nonfarm payroll revisions show a weakening trend
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US employment numbers for July showed nonfarm payrolls grew by 187,000. That was slightly less than market expectations, but still in line with a soft-landing scenario. (Two of our users generated forecasts in line with this data release: read about how they did it?here?and?here.)
However, equally newsworthy were the revisions to the May and June NFP figures: they were both reduced. Indeed, NFP is revised at least twice by the Bureau of Labor Statistics, so expect the July number to change as well (and for June to be revised again).
In this chart, we track two years of revisions, calculating the difference between initial numbers released and the latest estimate. So far, every payroll number published in 2023 has been revised downwards. The cumulative revisions since the beginning of the year represent a loss of 245,000 jobs.
Signs of a producer price inflation rebound in China
This chart tracks raw materials purchase prices for the manufacturers’ Purchasing Managers Index (PMI) for China. It also shows the historic correlation with producer price inflation (PPI)– which measures the average change in price of goods and services sold by producers and manufacturers in the wholesale market. (PPI is often a leading indicator for consumer price inflation.)
As PMI prices leave negative territory and climb toward the neutral line of 50, PPI’s year-on-year deceleration is also easing. Given China’s role in the global economy, inflation hawks will be watching.
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Macrobond news
Macrobond users successfully predict lacklustre nonfarm payrolls
Earlier this month, the US released job figures that missed expectations. Hamburg Commercial Bank’s Norman Liebke and our own economist, Meghna Shah, predicted this outcome by leveraging Macrobond’s extensive data, powerful APIs and partnership with Indicio Technologies.
Japan’s inflation revolution
Harry Ishihara explores how seismic changes are afoot in Japan’s economy – using nine Macrobond visualisations.
Learn more about Change Region functionality
In this video, Macrobond's own Usama Karatella is your guide to one of our most powerful features. With only a few clicks, apply your detailed macroeconomic analysis to another country with ease.
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