GlobalGeopolitical instability in the Middle East has continued to weigh on sentiment over the last few days not least given its potential to amplify financial instability. In our charts this week we contrast the recent spike in a global gauge of geopolitical risk with the absence – to date – of any meaningful climb in financial market volatility (chart 1). We look too at the oil price – a key bellwether of geopolitical stress – and the critical role this could play in triggering global economic strain in the period ahead (chart 2). On the data front this week’s economic news from China was much more upbeat (chart 3). But the longer-term outlook for that economy remains uncertain, one reason for which we focus on next (chart 4). The downward revisions that have been made to the IMF’s longer-term forecasts for the world economy is our subsequent port of call (chart 5). That policy makers have felt compelled to deploy fiscal policy levers and ramp up government debt in order to mask a disappointing growth outlook is the message from our final exhibit this week (chart 6).
USA| Oct 19 2023U.S. Existing Home Sales Decline in September
- Sales fall to 13-year low.
- Home prices weaken.
- Purchases fall in most regions of the country.
by:Tom Moeller
|in:Economy in Brief
- LEI shows consecutive m/m decreases since April 2022.
- Coincident Economic Index up for the fifth time in six months.
- Lagging Economic Index up for the second successive month.
USA| Oct 19 2023Philadelphia Fed Manufacturing Index Remains Negative in October
- Composite index is negative but orders, shipments & employment improve. Order backlogs & delivery times readings decline.
- Prices paid reading eases; prices received is little changed.
- Expectations backpedal a bit.
by:Tom Moeller
|in:Economy in Brief
USA| Oct 19 2023Initial Unemployment Claims Fell—Lowest Since January
- Claims unexpectedly fell to 198,000 in the week ended October 14.
- This is the lowest weekly level since January 21.
- Continuing claims edged up to their highest level since July 8, but remain low historically.
by:Sandy Batten
|in:Economy in Brief
France| Oct 19 2023France’s INSEE Survey Shows Weaker Manufacturing and Services
The INSEE industry climate gauge as a 29.6 percentile standing and the index fell month-to-month to boot. The index is still below (by 3.6 points) its level of January 2020 before the pandemic struck.
The INSEE manufacturing survey The manufacturing production outlook fell back to -10.3 in October from -6.1 in September, only slightly weaker than the August reading of -9.0. These expectations have been weaker since 2001 about 31% of the time and stronger nearly 70% of the time.
Production has a ‘recent trend’ that has worsened in the month as it fell to a diffusion value of -11.3 in October from -6.4 in September and -4.0 in August. This trend has been weaker historically by less than 10% of the time. Survey respondent also supply expectations for their own firm/industry as a ‘personal likely trend.’ This assessment fell to 4.8 in October from 16.6 in September – but it is higher in comparison to August. The reading for the own-firm trend is at a 29.1% standing, much better than for manufacturing overall but still a lower one-third of ranking value.
Orders and demand remained sub-par in October but improved to -17.3 from -21.5 in September and similar weakness in August. This entry has a percentile standing below its historic median at its 44.1 percentile. Foreign orders and demand have shown more persistent progress, rising to -2.9 in October from -13.0 in September; this series, quite contrarily, has a very strong 81-percentile standing. The French, in some sense, expect to be boosted by foreign economies. That remains to be seen since it is far from clear where this stronger growth is going to occur.
On the price front, the own-price responses are weaker than their August levels while for overall manufacturing prices, the expectation is for net stronger pressures. The own price ranking is at 34.8% with the manufacturing index at a 44.9 percentile.
- Rise in single-family starts is moderate.
- Increase fails to include Northeast.
- Single-family permits rise again, but multi-family permits decline.
by:Tom Moeller
|in:Economy in Brief
USA| Oct 18 2023U.S. Mortgage Applications Decline; Interest Rates Remain High
- Total applications weaken sharply to lowest level since 1995.
- Applications for purchase loans & refinancing decline.
- Mortgage interest rates remain at highest level since 2000.
by:Tom Moeller
|in:Economy in Brief
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