EcoWeek

Significant improvement in January employment and confidence data

Eco week 20-05 // 7 février 2020  
economic-research.bnpparibas.com  
5
ECONOMIC PULSE  
UNITED STATES: SIGNIFICANT IMPROVEMENT IN JANUARY EMPLOYMENT AND CONFIDENCE DATA  
According to its first estimate, Q4 19 US growth reached 2.1% q/q The three key surveys (manufacturing ISM, non-manufacturing ISM,  
(
saar), matching expectations. No bad news is good news. The fact that Conference Board consumer confidence index) all surprised on the up-  
the growth rate is keeping pace with the two previous quarters (it has side in January. The manufacturing ISM index has rebounded signifi-  
notably been its average pace since the start of the cycle mid-2009) cantly and has crossed the 50 threshold again for the first time since  
can also be seen positively. Growth remains moderate however and its July 2019. The non-manufacturing ISM index also slightly improved, for  
breakdown paints a mixed picture. In fact, the very positive contribu- the second month in a row, to a level that corresponds to its long-term  
tion of net exports saves the day. But this positive contribution results average. Consumer confidence materially increased again, from an al-  
from a negative evolution: the plunge in imports, also to be weighed ready high level. Last but not least, the January employment report  
against the very negative contribution of change in private invento- also surprised positively, with 225k non-farm payrolls added, a clear  
ries. On the personal consumption expenditures side, the significant improvement after the disappointing December figure (147k).  
deceleration was expected after two quarters of very strong growth.  
However, the Conference Board leading economic indicator downtrend,  
In contrast, the third decline in a row of nonresidential investment is  
already dating back to mid-2019 and albeit of limited scope, is a neg-  
more concerning.  
ative signal to be closely monitored. Moreover, we have to expect that  
Q1 20 growth prospects look mixed. On the positive side, residential the economic indicators for the next two months at least (February and  
investment is likely to grow strongly for the third quarter in a row. March) will be negatively impacted by the coronavirus outbreak.  
Change in private inventories could also provide additional support: a  
technical rebound is possible indeed after three quarters of negative  
contribution.  
Hélène Baudchon  
QUARTERLY CHANGES  
SURPRISE (Z-SCORE)  
Household consumption  
COB) (Jan-20)  
3
-month moving average (actual)  
(
-
-- 3-month moving average (4 months ago)  
CPI Core, m/m  
(Dec-19)  
CPI, m/m  
(
Dec-19)  
PCE Core Price Index,  
m/m (Dec-19)  
Personal Income  
(
Dec-19)  
ISM Manufacturing  
Jan- 20)  
(
ISM Non-Manf. (Jan-20)  
Industrial Production,  
m/m (Dec-19)  
Unemployment Rate  
(
Jan-20, sign inverted)  
Retail Sales, m/m (Dec-19)  
Change in Nonfarm Payrolls  
(
Jan-20)  
GDP Annualised,  
q/q (Q4' 19)  
SOURCE: THOMSON REUTERS, BNP PARIBAS  
SOURCE: BLOOMBERG, BNP PARIBAS  
The indicators in the radar and surprise charts are all transformed into z-scores. By construction, the z-scores have mean zero and their values,  
which indicate how far the indicator is removed from its long-term average, are in the interval between -3 and 3 in almost all cases. In the  
radar chart, the blue area shows the actual conditions of economic activity. It is compared with the situation four months earlier (dotted-line).  
An expansion of the blue area signals an improvement. In the right pane, the surprise is an actual outcome that differs from the market forecast  
(
Bloomberg).  
The bank  
for a changing  
world  
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