{"id":6681,"date":"2024-03-13T09:37:32","date_gmt":"2024-03-13T09:37:32","guid":{"rendered":"https:\/\/hamiltoncourtfx.com\/?p=6681"},"modified":"2024-03-13T09:37:32","modified_gmt":"2024-03-13T09:37:32","slug":"uk-us-and-chinese-economy-in-focus","status":"publish","type":"post","link":"https:\/\/hamiltoncourtfx.com\/es\/uk-us-and-chinese-economy-in-focus\/","title":{"rendered":"UK, US, and Chinese Economy in Focus\u00a0"},"content":{"rendered":"
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Word of the Week Wednesday<\/strong><\/h4>\n

Estimates Days: <\/strong>Three times a year the House of Commons holds \u2018Estimates Days\u2019 where Members of Parliament consider and debate the government public spending plans.<\/h4>\n

Two dates during summer are used to address the government\u2019s main estimates while a day in March (tomorrow in this case) is set aside to consider supplementary estimates from government departments.<\/h4>\n

While an estimate selected for debate can be amended, amendments to increase spending are not allowed.<\/h4>\n

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UK Growth<\/h2>\n <\/div>\n
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The UK economy showed signs of picking up over January as the UK\u2019s services sector \u2013 which accounts for roughly 72% of the UK economy \u2013 saw an uptick in growth. Overall, UK GDP grew 0.2% on a monthly basis for January, meeting market expectations. This followed December\u2019s contractionary print, where the UK economy shrank 0.1% over the month.<\/p>\n

Growth in the services sector was contrasted with production output which fell by 0.2% in January, following growth of 0.6% in December. This came as construction output rose by 1.1%, after a fall in December of half a percent.<\/p>\n

Commenting on Cross Industry Themes from the Monthly Business Survey, the ONS noted that \u201csome industries saw supply chains impacted by disruption in the Red Sea\u201d while \u201cindustrial action was again cited as a reason this month, which may have negatively impacted output\u201d.<\/p>\n

This morning\u2019s GDP print of course follows the UK entering a technical recession during H2 2023. The IMF forecasts UK GDP to grow by 0.6% in 2024 (in line with its October 2023 forecast), which would represent the second lowest growth in the G7 after Germany at 0.5%. While the OECD are expecting slightly higher growth of 0.7% this year, it can be contrasted against US growth which they expect will rise 2.1% over the course of the year.<\/p>\n

The New York Times run an interesting story this morning about rising concerns in the West over China\u2019s rise in exports.<\/p>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n\n

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China Ire<\/h2>\n <\/div>\n
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China has long been the manufacturer of consumer goods to the world, but the pace of growth now means their surplus in manufactured goods is around twice what Japan\u2019s was in the 1980s and they produce about as much as the US, Germany, Japan and South Korea combined!<\/p>\n

The problem that the West has is not necessarily with the volume of goods, but the fact that China continues to find ways of subsidising these goods, which they see as unfair advantage. Even with trade tariffs in place, China is often able to trade with other manufacturing hubs like Vietnam and subsidise the components they are buying from China, so the product is \u2018Made in Vietnam\u2019 and therefore not subjected to the same trade terms.<\/p>\n

Though \u201crules of origin\u201d can be tightened, there are plenty of countries that don\u2019t care that China is subsidising industry and are more than happy to be able to consume effectively discounted goods. For example, it\u2019s of little concern in Brazil that they\u2019re buying a Chinese product cheaper than a US equivalent.<\/p>\n

The concerns are two fold \u2013 one that China is putting local manufacturers out of business, but also that China is very happy to continue to do business with Iran, Russia and North Korea, which understandably doesn\u2019t sit well.<\/p>\n

It\u2019s not really clear what can be done about these practices though and, as much as it\u2019s a problem for the US and Europe, so is inflation, so cheaper goods may come at the cost of domestic productivity but it will help lower prices, whilst increase bilateral trade would mean potentially opening up China\u2019s billion or so consumers to the West\u00a0*see Apple and Tesla.<\/p>\n

One practice that has been suggested by economists is that China could subsidise their own population, rather than manufacturers and spur domestic demand, which would boost their economy whilst rolling back subsidies, to the same net economic benefit.<\/p>\n

The link to the article is here: China\u2019s Exports Surge Are Drawing a Global Backlash – The New York Times (nytimes.com)<\/a><\/p>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n\n

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US Inflation Surpasses Expectation<\/h2>\n <\/div>\n
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Yesterday, fresh data from across the Atlantic showed US inflation ticking up 10bps over February, hitting 3.2% on an annual basis. This beat market expectations – which was pointing to a 3.1% print, unchanged from January\u2019s print \u2013 and demonstrated that the Fed continue to face headwinds in their fight to bring inflation back down to their 2% target rate.<\/p>\n

Following the release of the CPI figures, markets downwardly revised rate cut expectations indicating that the Fed will likely hold higher for longer. For example, while markets on Monday were pricing in the around 91bps worth of cuts by the end of the year, this has now been downwardly revised to 85bps yesterday.<\/p>\n

The beat on US inflation figures comes as markets await the Fed\u2019s hotly anticipated Dot Plot next Wednesday which will see policy makers make forecasts on the central bank\u2019s monetary pathway. This will form part of the FOMC March meeting which will include the Fed\u2019s interest rate decision and the press conference half an hour later.<\/p>\n <\/div>\n <\/div>\n <\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"

Word of the week Wednesday, uptick in growth for UK service’s sector suggests UK economy on the up, China face backlash as they continue to find ways to subsidise their goods production, and US inflation hits 3.2% on an annual basis. <\/p>","protected":false},"author":15,"featured_media":1012,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"rp-language":[16],"class_list":["post-6681","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-morning-updates","rp-language-en_gb"],"_links":{"self":[{"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/posts\/6681","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/comments?post=6681"}],"version-history":[{"count":8,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/posts\/6681\/revisions"}],"predecessor-version":[{"id":6689,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/posts\/6681\/revisions\/6689"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/media\/1012"}],"wp:attachment":[{"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/media?parent=6681"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/categories?post=6681"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/tags?post=6681"},{"taxonomy":"rp-language","embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/rp-language?post=6681"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}