The People’s Bank of China injected 120 billion yuan of liquidity in the last week, the highest figure since February, in response to the slowdown in the recovery, which will be confirmed by the industrial PMI for August, for which the worst reading since April is expected. 2020.
Just a couple of tenths above the barrier that separates expansion from contraction (50 points), the estimate for the leading indicator of the Asian giant’s manufacturing activity in the last month points to the slowest pace of growth in the entire region. economic recovery, which began in May 2020 after the first major global lockdown due to the coronavirus pandemic.
China’s industrial PMI will be released on Tuesday, August 31 and, with a similar forecast, the same index but calculated by Caixin will be published on Wednesday, September 1. These data will only corroborate an announced slowdown . “The key question is how much of the slowdown is temporary and how much is due to the inevitable normalization of growth rates as momentum to reopen fades,” warns BofA’s team of analysts.
The slowdown, which took place this past week in the United States and in the euro area with the corresponding PMIs, also has to do with the incidence of the Delta variant of Covid at the local and global level, the geopolitical tensions in the face of the complicated situation it is going through. Afghanistan and the shortage of intermediate goods, supply problems and the semiconductor crisis, which is affecting important industries such as automobiles.
“In the current environment, where there are increasing reasons for uncertainty, such as the loss of economic momentum due to the new global wave of infections by the Delta variant of the coronavirus, corporate profits have so far been a piece of solid ground in in the midst of the storm, “observes Stefan Rondorf, a strategist at Allianz Global Investors.
“Our economists expect GDP growth to pick up in both the United States and China in the fourth quarter, even as the eurozone slows down,” add BofA analysts. “China’s stock markets have been falling since March due to the evidence of a stagnant economy ,” insists Jean-Baptiste Berthon, a strategist at Lyxor AM, who warns of regular risks in the second global power.
The job after Jackson Hole
China’s PMI indices will not be the only important data for the week. “More prominent is probably the report on the US labor market, which will be released on Friday, September 3,” considers Allianz’s Stefan Rondorf.
“To kick off the much-discussed tapering reduction, the Federal Reserve (Fed) wants to first see substantial progress in the labor market: the more jobs are created in August and the more visible the improvements in In this market, the sooner the institution will be able to reduce its bond purchase program “, continues the expert.
“However, this is already being taken into account in the forecasts, and thus, in a context of historically low returns, the fixed income market could react strongly to particularly strong or weak labor market figures,” he concludes.
Back in the eurozone, another different indicator but also directly related to monetary policy will be published on Monday, August 30: the inflation data in August for Germany or Spain.
For the economic engine of the Old Continent, estimates point to an interannual variation of 3.3%, the highest since the 2008 crisis, just after the minutes of the last ECB meeting were released, which show “a wide Most of the (Governing Council) members indicated that they could support the revised guidance proposal “after the new strategy was unanimously approved, although some of them expressed reservations because they felt that the new guidance did not reflect their concerns about overdoing it. and it could be seen as “a promise to keep interest rates at the current level or lower for a very long period of time without an explicit escape clause.”
The textual message that the ECB gave to the markets and the general public on July 22 was: “The Governing Council expects the ECB’s official interest rates to continue at their current levels, or lower, until it observes that the inflation stands at 2% well before the end of its projection horizon and lasting for the rest of said horizon “.