5/4/21: BRIC's Manufacturing PMIs: 1Q 2021

 

Given a lot of noise about economic re-opening and abatement of the late 2020 wave of the pandemic, we expected BRIC countries PMIs to improve significantly in 1Q 2021 compared to 4Q 2020. Alas, the opposite took place:

• Brazil Manufacturing PMI fell from 64.1 in 4Q 2020 to 55.9 in 1Q 2021. All three months of 1Q 2021 came in sub-60 (all three months of 4Q 2020 were above 60) and March 2021 was the lowest monthly reading since June 2020.
• Russia Manufacturing PMI slipped from 51.5 in February to 51.1 in March. On quarterly basis, Russia Manufacturing PMI actually managed to rise from a recessionary reading of 47.6 in 4Q 2020 to a weak recovery reading of 51.2 in 1Q 2021. This is the highest reading since 1Q 2019 and the first above-50 reading since the end of 2Q 2019. Russia was the only BRIC economy posting increasing PMI in Manufacturing sector in 1Q 2021, and at that, the improvement went to anaemic growth from pretty steep contraction.
• China Manufacturing PMI disappointed, falling from 53.8 in 4Q 2020 to 51.0 in 1Q 2021. Given structural importance of Chinese manufacturing globally, this implies a further build up in orders backlogs in the global supply chains, signaling more inflationary pressures down the line. On a monthly basis, March 2021 posted fourth consecutive decline in monthly PMIs, with March reading of just 50.6 - statistically, basically indistinguishable from zero growth conditions in the sector.
• India Manufacturing PMI fell from 57.7 and 57.5 in January and February 2021 to 55.4 in March 2021, marking the slowest monthly rate of growth since August 2020. On a quarterly basis, India Manufacturing PMI fell from a hard-to-believe rate of expansion of 57.2 in 4Q 2020 to still robust growth of 56.9 in 1Q 2021.

Brazil and India were the two BRIC economies that managed to outperform global manufacturing sector growth in 1Q 2021 which came in at 54.1, up on 53.5 in 4Q 2020.

Global GDP-weighted BRIC group Index of Manufacturing Activity that I calculate based on Markit data fell from from 54.8 in 4Q 2020 to 52.8 in 1Q 2021, reaching the lowest reading since 2Q 2020 when it was at 45.0. Whilst BRIC group Index of Manufacturing Activity outperformed Global Manufacturing PMI in every quarter between 1Q 2019 and 4Q 2020, it fell below the global measure in 1Q 2021.

5/4/21: The Coming Wave of Financial Repression

 

In a recent article for The Currency, I covered the topic of the forthcoming wave of financial repression, as Governments worldwide pursue non-conventional fiscal tightening in years to come: Make no mistake, financial repression is coming in the US: https://thecurrency.news/articles/36547/make-no-mistake-financial-repression-is-coming-in-the-us/. 

5/4/21: The Entrepreneurship Boom: Forced, Voluntary and Funded

 

My recent article for The Currency covering the ongoing global developments in entrepreneurship: The US is experiencing an entrepreneurship boom. So, what is going wrong in Ireland?: https://thecurrency.news/articles/40790/the-us-is-experiencing-an-entrepreneurship-boom-so-what-is-going-wrong-in-ireland/

2/4/21: America's Scariest Chart: U.S. Employment Situation

Now, the last of the series of posts on U.S. labor markets, concluding with America's Scariest Chart, plotting the index of employment (jobs) in the U.S. based on each recession-recovery cycle:

Despite some positive headline numbers on some labor market metrics, jobs creation in the U.S. is not  progressing well-enough to claim any end in sight for the Covid19-induced recession. Current reading for jobs index, relative to pre-recession highs is woeful. So woeful, today's state of U.S. markets ranks as the second worst jobs recession in modern history, so far, worse than the Great Recession. 

Good news is that in March, pace of recovery accelerated from a major slowdown experienced in the first two months of 2021. The bad news is, unless this pace is sustained, we are risking a scenario where unprecedented policy (fiscal and monetary) supports unleashed since the start of 2Q 2020 will be associated with a jobs recovery that is second-third worst in the modern history of U.S. recessions. Time will tell.

Note: 

• Post 1 covering continued unemployment claims is available here: https://trueeconomics.blogspot.com/2021/04/2421-us-continued-unemployment-claims.html
• Post 2 covering labor force participation rate and employment-to-population ratio is available here: https://trueeconomics.blogspot.com/2021/04/2421-us-labor-force-participation-and.html
• Post 3 covering non-farm payrolls is available here: https://trueeconomics.blogspot.com/2021/04/2421-us-non-farm-payrolls.html.
• Post 4 covering new unemployment claims is available here: https://trueeconomics.blogspot.com/2021/04/2421-us-new-unemployment-claims.html, and
• Post 5 covering duration of unemployment claims is available here: https://trueeconomics.blogspot.com/2021/04/2421-us-duration-of-unemployment.html.

2/4/21: U.S. Duration of Unemployment

One of the America's Scariest Charts - a long-term running issue I have been highlighting for a number of years now - is roaring back to prominence as Covid19 pandemic crisis continues to impact U.S. labor markets across virtually all possible metrics of health.

Here it is: the average duration of unemployment spells:

Unemployment spells become short at the start of the recession as new vintage unemployed join the ranks of long term unemployed. As the recovery sets in, unemployment duration starts to take into the account a different and changing mix of those on unemployment: the share of total unemployed who are short-term unemployed shrinks, the share of the longer term unemployed rises. Secularly, however, virtually every past recession since 1970s on has resulted in a longterm increase in average duration of unemployment during the recovery phase of the business cycle. In other words, the longer term unemployed became even longer-term unemployed. And now, the Covid19 pandemic joins the line of past recessions with continuing on this trend. 

Chart next compares each recession and subsequent recovery period since the end of the WW2 through current:

Based on the average duration of unemployment, we are now (in the Covid19 pandemic recession) are tracking the worst recession on record: the Great Recession. Weeks ahead will tell us, if indeed this will be a new record-breaking recession, beating the length of average unemployment spell established in the Great Recession. But for now, with all the recovery going around, the unemployed are becoming longer and longer-term unemployed.

Not exactly a picture of robust health being restored in the U.S. labor markets.

2/4/21: U.S. New Unemployment Claims

Continuing with the coverage of core statistics for the U.S. labor markets performance. This post covers new unemployment claims through March 20, 2021, with the last two weeks of data being preliminary estimates.

In the week through March 20, 2021, new unemployment claims fell to 656,789, or four weeks running total of 2,892,799 dipping below the peak of the Great Recession levels of 4 weeks total of 3,313,000. This is the good news.

The bad news is that latest reading would rank 58th worst in the history of the weekly series, if we are to exclude the Covid19 period. Another part of the bad news is that last week's weekly rate of decline of 100,412, the fastest rate of decline in four weeks, is actually slower than average weekly rate of decline for the pandemic period. 

4 weeks running average rate of improvement in new unemployment claims is just 14,943. Which means that at this rate of labor market improvements, it will take 30.6 weeks to regain pre-Covid lows of new claims.

Things are improving. But they are improving at less than impressive rates.

Note:

• Post 1 covering continued unemployment claims is available here: https://trueeconomics.blogspot.com/2021/04/2421-us-continued-unemployment-claims.html
• Post 2 covering labor force participation rate and employment-to-population ratio is available here: https://trueeconomics.blogspot.com/2021/04/2421-us-labor-force-participation-and.html
• Post 3 covering non-farm payrolls is available here: https://trueeconomics.blogspot.com/2021/04/2421-us-non-farm-payrolls.html.

2/4/21: U.S. Non-Farm Payrolls

 In the first part of the series of updates on the U.S. labor markets, I covered continued unemployment claims (https://trueeconomics.blogspot.com/2021/04/2421-us-continued-unemployment-claims.html), followed by the second post covering labor force participation and employment-to-population ratio (https://trueeconomics.blogspot.com/2021/04/2421-us-labor-force-participation-and.html).

Now, consider total non-farm payrolls - a measure of jobs present in the economy:

Total non-farm payrolls rose in march 2021 to 143,400,000, up on 142,077,000 in February. However, the increase still leaves the payrolls 9,777,000 short of the pre-Covid19 highs. The rate of jobs addition rose in March to 1,323,000 from February growth rate of 1,097,000. Combined jobs expansions of February and March, however, are not sufficient to cover the jobs losses of 2,622,000 sustained in January 2021. Average monthly jobs recovery during the pandemic period is 1,195,000, which means that it will take ca 8 months at the average rate of jobs creation for the economy to regain its pre-Covid19 highs in jobs numbers.

2/4/21: U.S. labor force participation and employment to population ratio

 

In the previous post, I covered U.S. continued unemployment claims: https://trueeconomics.blogspot.com/2021/04/2421-us-continued-unemployment-claims.html, noting that decreases in unemployment counts are, in part, driven by workers dropping off unemployment rolls due to exits from the workforce and/or expirations of unemployment benefits. Here is the data on U.S. labor force participation rates and employment to population ratio through March 2021:

Things are still ugly when it comes to these two measures of labor markets health in the U.S: 

• Latest reading for U.S. labor force participation rate at 61.5 is just a notch up on February's 61.3, but is unchanged on November 2020. Pandemic period average labor force participation rate is woefully low at 61.7, which is still higher than March 2021 reading. March reading is equivalent to the average reading for the decade of the 1970s which was marked by stagflation and high unemployment.
• Latest reading for U.S. employment to population ratio is at 57.7 - an improvement on February reading of 57.3, and better than the pandemic period average of 56.9, but still comparable to the levels seen only in the early 1980s. 

Both metrics show the brutal nature of the current labor markets, where demand for skills is rising, including in manufacturing, while services jobs (and lower-skilled B2C services jobs in particular) are still hard to find.

2/4/21: U.S. Continued Unemployment Claims

Continued weekly unemployment claims fell in the week of March 20 to their lowest Covid19 pandemic period point of 3,794,000 (seasonally adjusted). The decline in the unemployment claims driven by a combination of:

1. Jobs creation
2. Benefits expiration
3. Exits from the labor force

Even with the positive news, U.S. current reading is in line with March 2011.

More updates on the U.S. labor markets coming up, so stay tuned.

2/4/21: COVID19: Nordics v Sweden

Sweden continues to perform poorly compared to peer countries, irrespective of how one defines Nordic countries as a group:

As table above shows, Sweden is the worst performer, by a large margin than any other Nordic or Northern European country when it comes to deaths from Covid19 pandemic.

Per charts below, adjusting for population differences, Sweden performs worse than any Nordic group of countries configuration imaginable in cases and deaths counts:

These facts are now recognized by policymakers in Sweden itself, even though the country continues to be a poster-child for the Covid19 denialists around the world.

2/4/21: COVID19: U.S. vs EU27 comparatives

US vs EU27 comparatives in the pandemic dynamics through the week 12 of 2021 are showing continued, albeit declining improvement in the relative position of the US. That said, much of the improvement is down to lags in new waves development, with the EU27 now firmly in its Wave 3 and the U.S. potentially entering Wave 4.

Based on the table and charts posted above, Europe (EU27) has now lost the plot on containing the pandemic. This takes place at the time when EU27 is botching roll out of vaccinations. On the more optimistic side, the U.S. roll out of vaccines has been relatively fast-paced, although logistics and delivery have been highly varied across different states and effectiveness can be significantly improved.

As the result, U.S. has managed to somewhat shrink the gap in terms of excess deaths from Covid19 pandemic compared to the EU27.

With more people infected, and higher vaccination rates, the U.S. is also holding a major advantage on the EU27 in terms of mortality rates per case.

Nonetheless, dynamics of the pandemic evolution are not promising: the U.S. is potentially entering a new wave of the pandemic, Wave 4, on foot of:

• Dramatic relaxation of prior restrictions and public health measures across many states, well-ahead of vaccinations making a significant impact on infections;
• Increased seasonal travel and social activities (primarily due to Spring Break);
• Severely lax enforcement of Covid19 restrictions and measures during the last 3 months; and
• Effectively free-for-all, cavalier approach to public safety by many U.S. residents.

Growth rates in both cases and deaths are quite dramatic:

If sustained, these dynamics will lead to acceleration in deaths counts in the U.S. and Europe. As things stand, the U.S. death toll from this pandemic already exceeds the combined number of combat-related deaths sustained by the U.S. is ALL wars from the mid-point of the Civil War. Put differently, Covid19 has now officially killed more Americans within one year of the pandemic as 160 years of all wars the U.S. engaged in. The U.S. excess death toll relative to the EU27, adjusting for population sizes is now at 111,789 - more than all deaths in combat since 1945. Adjusting for age differences and population sizes, U.S. excess mortality from Covid19 is 125,204 or more than total U.S. combat deaths since the start of 1945, the last year of World War 2.

Is American public health system fit for purpose? Anyone? 

2/4/21: COVID19: BRIICS

 As warned last month, BRIICS are now in a new wave of the pandemic, just like the rest of the world:

The new wave is worse than the previous one in terms of new weekly case counts and deaths. Brazil and India are leading the new cases pandemic, while Brazil leads in terms of deaths. Russia is relatively stable on deaths counts at highly elevated levels, while India death counts (highly suspicious in terms of low numbers throughout the entire 2021 so far) are now rising once again.

Table above shows summary of dynamics in current weekly cases and deaths relative to the prior 4 weeks average. 

These numbers strongly indicate that risk of pandemic will continue to spill over across the world, with no country immune to the new wave developing, until reaching 'herd immunity' levels via immunizations, assuming no adverse mutations in the virus.