3/10/20: Eurocoin Leading Growth Indicator 3Q 2020

 

Eurocoin, a leading growth indicator for the euro area published by CEPR and Banca d'Italia posted another negative (recessionary) reading in September (-0.31) after marking peak growth contraction of COVID19 pandemic period in August (-0.64). This puts Eurocoin in negative territory for the 6th consecutive month since March 2020. 

Current forecast for 3Q 2020 growth remains at -3.5 percent q/q. Deflationary pressures are also building up. Euro area's 12 months average HICP forecast for 3Q 2020 stands at around 0.6 to 0.5.

As the chart above shows, Eurozone remains deeply in a recessionary territory based on Eurocoin forecasts and inflation dynamics. Longer term growth averages are shown in the chart below:

Overall, as noted above, one must take all leading indicators and forecasts with some serious warnings attached: we are in an environment where past models for forecasting economic aggregates become severely challenged.

3/10/20: BRIC: Manufacturing PMIs Q3 2020

 

Based on July-September data, here are the main takeaways from the BRIC Manufacturing Sector PMIs for 3Q 2020:

• Brazil Manufacturing PMIs gained serious speed in 3Q 2020 compared to 2Q 2020, rising from a recessionary reading of 42.0 in April-June to signal rapid recovery at 62.6 over the last three months through September. This marks the highest quarterly reading on record for the country Manufacturing sector. Dynamically, growth accelerated in every month since the start of the sector recovery in June 2020.
• Russia Manufacturing PMI came in at a disappointing and contractionary 49.5 in 3Q 2020, marking the fifth consecutive quarter of sub-50 readings, although still an improvement on the pandemic period low of 39.0 set in 2Q 2020. Adding pressure to the already poor performance, monthly PMI reading slumped from a relatively weak recovery signalled by PMI at 51.1 in August to a recessionary reading of 48.9 in September. 
• India Manufacturing PMI rose from 52.0 in August to 56.8 in September, with 3Q 2020 reading at 51.6 - a substantial but likely incomplete recovery on the pandemic low of 35.1 set in 2Q 2020.
• China Manufacturing PMI rose from 2Q 2020 reading of 50.4 to 3Q 2020 reading of 53.0, implying almost a full recovery in the manufacturing sector on 1Q 2020 pandemic period trough of 47.2. September marked a fifth consecutive month of PMI readings above 50.0. 

Overall, BRIC weighted Manufacturing Activity Index (based on monthly PMIs) stood at 53.0 in 3Q 2020, up on 45.0 in 2Q 2020 and 49.1 in 1Q 2020. Current reading signals the fastest q/q growth in the sector since 1Q 2011. The ongoing recovery across the BRIC economies is faster than Global Manufacturing PMI recovery (at 51.6), albeit highly uneven and somewhat suspicious. The core driver for this growth is Brazil, where manufacturing data dynamics is completely out of touch with services data dynamics and looks extremely unreliable. 

2/10/20: SSIR on our Social Impact Investment project

 

An article about our long-running social impact (public health impact) investment project partnership with the Stanford University team is now available via the Stanford Social Innovation Review: https://ssir.org/articles/entry/river_helpers. 

2/10/20: A new mortgage arrears crisis on its way

 

My latest article on Irish banking sector problems with distressed mortgages is out today in The Currency: 

There’s a new mortgage arrears crisis on its way, and official Ireland is not ready for it

The Central Bank of Ireland has started publishing new data on mortgage arrears – and the news is not good. An arrears crisis is brewing. The banks, and the state, are woefully unprepared for it.

https://thecurrency.news/articles/24779/theres-a-new-mortgage-arrears-crisis-on-its-way-and-official-ireland-is-not-ready-for-it/ 

27/9/20: U.S. Labor Force Participation and Employment-Population Ratios

 Yesterday, I posted updates to the America's Scariest Charts series on the U.S. labor markets (see https://trueeconomics.blogspot.com/2020/09/26920-americas-scariest-charts-duration.html). Two commonly over-looked and under-reported labor markets statistics worth covering in any analysis of economic conditions in the country are:

• The labor force participation rate, and
• The employment to population ratio.

Both have been shockingly impacted by the COVID19 crisis, and both are experiencing only partial recovery to-date. 

As the chart above illustrates:

• U.S. Labor Force Participation rate stood at 61.8 at the end of August 2020, a slight deterioration on July 2020 (62.0), but above the COVID19 trough of 60.0 in April 2020. Current level is below 2020 average of 61.9, which is itself the lowest decade average since the 1970s. Excluding CIOVID19 period, latest reading for the participation rate is the absolute lowest since May 1977.
• U.S. Employment to Population ratio has fallen to its all-time lows in April 2020, and has recovered since. At the end of August is stood at 56.5 percent, up on 51.3 percent pandemic period low, and in-line with the 2020 average to-date. Before the start of the pandemic, the ratio stood at 60.9 and the previous decade average was 59.3. In historical comparatives terms, the latest reading for this indicator is the lowest (excluding the pandemic period lows) since early 1983.

In terms of both indicators, current conditions in the U.S. labor markets are worse than those encountered at the worst points of any recession since 1983, including the depths of the Global Financial Crisis. And this assessment comes after 3 months of the ongoing 'recovery'. 

26/9/20: America's Scariest Charts: Duration of Unemployment

 Adding to my prior posts covering:

• Continued unemployment claims: https://trueeconomics.blogspot.com/2020/09/26920-americas-scariest-charts_27.html, and
• Initial unemployment claims and employment: https://trueeconomics.blogspot.com/2020/09/26920-americas-scariest-charts_27.html

Here is analysis of the latest duration of unemployment data, and a look at employment data across past recessions.

As usual with all recessions, average duration of unemployment has fallen in the early days of the pandemic, as new unemployment cases rose dramatically, compared to prior existent claims. Since then, however, average duration has been creeping up. 

As the jobs recovery continues, we will be seeing further increases in the average duration of unemployment as a sign of longer term unemployment, so keep an eye for the future updates to the graph.

At the peak of the pandemic, average duration of unemployment fell to just 6.1 weeks or 15.6 weeks below pre-pandemic average. As of the end of August 2020, average duration of unemployment was at 20.2 weeks, or just 1.54 weeks below the last post-recession period average. 

Taking a slightly different look at the labour markets, consider current employment levels relative to the 6 months pre-COVID19 average levels of employment:

The chart above helps strip out volatility in the levels of employment across the business cycle by using 6 months average levels of employment for the period prior to the onset of the recession as a benchmark and then relating recession period and subsequent recovery period employment levels to this benchmark.

Clearly, current recovery to-date has been sharp, but given the levels of employment contraction in the first months of the pandemic, even this speed of the recovery is not sufficient to bounce employment levels back to where they were during pre-COVID19 period of economic growth. The chart also shows that recovery in employment has slowed down sharply in August, compared to June and July.

26/9/20: America's Scariest Charts: Employment & Initial Unemployment Claims

 

Starting with initial unemployment claims (continued claims are covered in the earlier post: https://trueeconomics.blogspot.com/2020/09/26920-americas-scariest-charts_27.html) through the week ending September 19, 2020, based on non-seasonally adjusted data:

• Initial unemployment claims fell to 796,015 in the week ending September 12 - marking the lowest number of new claims filed in any week since the start of the COVID19 crisis.
• The new claims rose back to 824,542 in the week ending September 19, bringing the numbers of new claims back above 800,000.
• The latest 4 weeks average new unemployment claims stand at 830,890 weekly claims, which is above the highest number reached since the peak of the Global Financial Crisis. 
• Pre-COVID19 period historical high was attained in the week of September 1, 1982 at 1,073,500 new claims filed. The latest reading for September 2020 ranks as the 35th highest in the entire history and 10th highest if COVID19 period data was excluded from the set.
• The latest 3 months cumulative new claims number stands at 13,789,312, down from the COVID19 pandemic peak of 41,865,591. 
• Current cumulative count (3 months) is 4,607,312 above the pre-COVID historical high attained March 1, 1975.
• Since the start of the labour markets recovery, average weekly improvement in the initial claims has been a reduction of 224,453 claims per week. This fell to just 305 claims reductions per week over the last 4 weeks. This is not encouraging.

Chart to illustrate the dynamics:

Now, employment figures, based on the seasonally-adjusted non-farm payrolls through August 2020 (the latest data we have):

As it says in the boxes in the chart: 

• Current reading to pre-crisis high is still down 11,549,000, but we are up on crisis period low by 10,612,00.
• Crisis low employment to pre-crisis high was down 22,160,000, and the running rate of the recovery since the lowest point of employment in COVID19 pandemic has been an addition of 2,653,000 per month on average. With this rate of recovery, it will take the economy 4.4 months to regain pre-COVID19 levels of employment.
• However, last month's rate of jobs recovery was only 1,332,000, which implies employment levels recovery to pre-COVID19 levels of 6.7 months, at this rate of jobs growth.

26/9/20: America's Scariest Charts: Continued Unemployment Claims

 

Updating my charts for the continued unemployment claims:

The latest data is covering the period through September 12, 2020.

• On a non-seasonally-adjusted basis, there were 13,355,586 Americans with continued unemployment claims in the week of September 12, 2020, an increase of 212,869 on the week prior, but 9,438,559 down on the COVID19 peak reached in the week of May 9, 2020. At the lowest point in pre-COVID expansion period, weekly continued claims stood at 1,350,834. 
• In the last 4 weeks through September 12, 2020, average decline in continued unemployment claims was 461,476. At this rate of decline, it will take the U.S. economy 26-27 weeks to recover its pre-COVID19 lows in terms of continued unemployment.
• Current level of continued unemployment claims implies 9.14% unemployment rate.

Per charts above - covering seasonally-adjusted data that has been subject significant methodological revisions starting with September 2020:

• It would take thee U.S. economy 33 weeks from September 12, 2020 to complete full recovery to pre-COVID19 levels of continued unemployment claims
• In seasonally-adjusted terms, unlike in terms of raw data discussed above, September 12, 2020 continued unemployment claims stood at 12,580,000 down 167,000 on week prior. 

I will be covering new or initial unemployment claims in the net post, so stay tuned. 

26/9/20: Workers Should Brace Themselves for the post-COVID19 New World

 

My recent article on potential long-term impacts of COVID19 pandemic on corporate development and investment strategies for The Currency: https://www.thecurrency.news/articles/24259/workers-should-brace-themselves-things-will-only-get-worse. 

25/9/20: COVID19 Update: Nordics

 

Sweden is not acquiring the fabled 'herd immunity', folks. And other Nordics are now in a full-blown second wave of the pandemic:

As the figures above show, 

• Sweden has been experiencing a reduction in new cases through the first week of September. This resulted in Swedish daily case counts finally dropping below the numbers reported in other Nordic countries. 
• Since the start of September, Nordics ex-Sweden have entered the second wave of Covid19 pandemic, further exacerbating their relative position compared to Sweden.
• However, Sweden itself is now experiencing the second wave of the pandemic, and Sweden's historical troughs of new cases have remained always higher than the troughs reached by the other Nordic states.
• Both Sweden and the rest of the Nordics continue to enjoy low levels of deaths, however, in line with the numbers of new cases, Nordics ex-Sweden are showing signs of the new wave of the pandemic lifting deaths counts relative to the past troughs.

25/9/20: COVID19 Update: Russia

 

Russia is now experiencing the second wave of COVID19, although it is still in the early stages of this development:

Russia first started to impose lockdowns around March 2, which lasted through mid-June (an earlier partial lifting of lockdowns in Moscow took place in the first week of June). The lockdowns coincided with much lower daily cases and deaths than are being registered currently, but despite this, Russia is not currently planning to impose stricter controls on social activities in the wake of the accelerating pandemic numbers. The reason for this is the expressed hope that the recently-released vaccine against the COVID19 will be widely available to the general population by November 2020. The vaccine does not have an independent peer-validated confirmation of its effectiveness so far. 

Here is a table summarizing Russia's relative positioning compared to other BRIICS, the EU27 and the U.S.:

Note: data excludes China, for two reasons: (1) China's officially-reported case numbers are less than 100,000, and (2) I have zero credibility in China's officially reported COVID19 statistics, so while questions can and should be raised about robustness of data reported in BRIICS overall, China's data suggests an altogether novel levels of data manipulation compared to its peers.

25/9/20: COVID19 Update: Countries with 100,000 cases and higher

 Summary tables for 36 countries with 100,000 cases and above:

The U.S. continues to 'lead' the world in terms of sheer magnitude of the pandemic, followed by India, Brazil and Russia. The U.S. also continues to dominate the world tables in the numbers of people who died from the COVID19, followed by Brazil, India and Mexico. 

While the U.S. only accounts for 4.3% of the world population, it accounts for 22% of all cases of COVID19 and 21% of all deaths from the disease. 

Meanwhile, the highest per-capita rate of infections is registered in Quatar, followed by Panama and Peru. The highest per-capita deaths are in Peru, Bolivia and Brazil, while the highest mortality rate (deaths per confirmed cases) are in Italy, Mexico and the UK.

Out of all countries with 100K cases and higher, plus the EU27, as ranked based on three criteria (cases per capita, deaths per capita and deaths per case)

• The U.S. ranks 8th worst performer,
• The EU27 ranks 16th worst performer
• The U.S. ranks worse than any EU27 member state in the 100K table, with exception of Spain (ranked 3rd worst).