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Market news - 15 February 2019

by  Niloofar Rafiei  |  15 Feb 2019

UK GDP figures weak for Q4 2018

  • UK GDP contracted 0.4% last December, leaving Q4 2018 at a paltry 0.2%. The weakness was led by manufacturing (with the sector entering a technical recession as this was the sixth consecutive monthly decline) and construction.
  • The household sector, buoyed by ongoing growth in real wages and employment, proved more robust than the corporate sector as private consumption rose 0.4% in Q4, with this impression reinforced by the January retail sales print (+1.2% MoM ex fuel vs +0.2% consensus).

US data remarkably poor

  • US data published last week were remarkably poor. January industrial production fell 0.6% vs expectations for a small rise, December retail sales fell 1.7% on the 'control group' measure (expectation was for a 0.4% rise), and January NFIB small business survey plunged to its lowest since November 2016.
  • The February Empire manufacturing survey was a lone pinpoint of light in the darkness, registering a slightly larger than expected increase.
  • Whilst these data points may still be blips, what is slightly more concerning is that initial jobless claims appear to be trending higher. The 4-week moving average of the series bottomed at the end of September 2018 at 206,000, but by last week had risen to 232,000.

Chinese exports are, however, positive

  • Chinese exports in US$ terms leaped 9.1% YoY in January, although the data are likely distorted by the timing of Lunar New Year and the run rate in Q1 should overall prove tepid.
  • On the other hand, total social financing (the broadest measure of credit creation) surged to a record RMB 4.64trn in January, well above already (seasonally) inflated expectations, with tightness in the 'shadow banking system' continuing to abate.