The Day at a Glance | August 16 2021

The Top

*Growth figures in China disappoint.

*46 Republican Senators opposed increasing the debt ceiling in the United States.

*Japan`s economy avoided a recession due to a revival in consumption (GDP 2Q21 1.3% annualized; vs 0% e.).

*If future employment reports are as good as July`s, we will have progressed enough to withdraw stimuli: Neel Kashkari, Minneapolis FED.

Economic environment

Growth in China disappoints. Growth figures in China logged a greater than expected slowdown during July. Retail sales (8.5% annual vs 10.9%e.) and industrial production (6.4% vs 7.9%e.) slowed down considerably, which confirmed that the recovery has lost its momentum. Consumption was affected in the later part of the month due to the implementation of mitigation measures set in place to contain the virus`s most recent outbreaks, while industrial production was held back by floods, low automobile sales, new regulations and a scarcity of semiconductors. The virus`s outbreaks have continued affecting the country during August, which raises concerns regarding domestic growth and the global economic recovery. Slower growth in China could affect demand for raw materials (oil, industrial metals). Nevertheless, the data doesn’t suggest that the recovery is derailing. The greatest weakness can be seen in consumption, which is expected to still be weak in August; but production could be slowing down temporarily – due to regulatory measures in Beijing to control contamination – and risks for the real estate market, which affected cement and steel production in addition to investment in properties and infrastructure (fixed investment 4.3% YTD in July). The Central Bank of China decided to leave its monetary stance unchanged on Monday, despite the economic slowdown.