Anything backward-looking has been rendered somewhat meaningless by the Wuhan virus, an unfortunate state of affairs, given that the global economy was arguably on the cusp of inflecting for the better.
And yet, it’s still worth keeping yourself apprised of the incoming data. If the outbreak abates and remains largely confined to mainland China, the data from December and January suddenly “matter” again.
With that in mind, note that Hong Kong exports snapped a 13-month streak in contraction in December, data out Thursday showed.
As alluded to above, this may well end up being a false dawn. In addition to the very real possibility that the virus further cripples an already hamstrung Hong Kong economy, civil unrest remains a key risk. The city fell into recession late last year, while retail sales and PMIs have plunged. Stimulus efforts have generally been described as insufficient.
Still, it does speak (albeit meekly) to the recovery narrative that prevailed prior to the virus outbreak, and although South Korea’s exports may be impacted by the unfolding crisis too, numbers out of Seoul recently showed signs of improvement.
Meanwhile, in the epicenter of the global factory slump, the number of Germans out of work fell by 2,000 this month. Economists had expected an increase. The jobless rate stuck at 5%, close to its record low. And, inflation printed 1.7% YoY, up from last month. Harmonized, the print was 1.6%, a shade lower than forecasts, but we’re moving in the right direction.
Does any of this matter? Well, yes. Otherwise, I wouldn’t have wasted my time writing it.
What you’re going to see over the next two months is analysts trying to parse the incoming data for the virus effect, and separate that out in order to get a “clean” read on where things stand. What the data from December and January generally (and I emphasize generally) shows, is a tentative inflection. The numbers mentioned above underscore that.
The question is whether it’s durable. That would have already been a debatable point, but it’s even more so now, given the distinct possibility that the global health scare will be Roundup on the “green shoots”.