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Janet Mui: weekly economic update 7 February

Chinese authorities have taken measures to shield the economy and markets from the impact of coronavirus. In the US, the latest data suggest hiring remains healthy.



Janet Mui
Global Economist, Cazenove Capital
  • Chinese markets fell sharply at the start of the week. They recovered modestly after the government and central bank announced supportive measures. 
  • These included short-term interest rate cuts, liquidity injections and tax cuts for companies impacted by the epidemic. Authorities have also halved the tariff rate imposed on US imports into China.
  • The US added 225,000 jobs in January, significantly exceeding economists’ expectations and taking the three month average above 200,000. Wage growth is now running at 3.1%. In US election years, the strength of the employment market has historically been a good indicator of an incumbent president’s chances of re-election.
  • Eurozone industrial activity remains weak, according to recent data. German industrial production fell close to 7% over 2019, the weakest performance since the financial crisis. In France, public sector strikes took a toll on manufacturing.
  • We do not expect an improvement in the first quarter, given the impact of the coronavirus on global supply chains. Once the virus is contained, however, we expect that the trade agreement between the US and China will lead to some improvement in the second quarter.



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Janet Mui
Global Economist, Cazenove Capital


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