The Day at a Glance | August 2 2021

The Top

*China`s economy slowed down during July.

*The Delta variant could keep Americans away from looking for work, potentially harming the US recovery: Neel Kashkari, Minneapolis FED.

*Retail sales in June doubled estimates in Germany (4.2% monthly).

*Economic indicators: The US Manufacturing ISM will be published (60.9e.).

Economic environment

PMIs in China confirmed a slight slowdown during July. The world`s second largest economy recorded its slowest rate of acceleration in four months as it logged a greater than expected slowdown in the manufacturing sector (50.4 vs 50.8 e.). Services also slowed down (53.3), even though they set in line with forecasts. China`s economy continues to grow, although it continues to moderate its rhythm of expansion in an environment in which a shortage of chips and problems with electricity supply among factories have limited growth in the manufacturing sector. Additionally, China has confirmed its largest COVID19 outbreak since the end of 2019 as the Delta variant`s spread in the country could continue to affect production and consumer spending. Indicators also showed a new acceleration in prices and raw materials for manufacturing companies, which is something that could also hinder growth. In recent meetings, the Politburo of the Communist Party called for alternatives for fiscal aid to be more effective and reiterated that the country`s monetary policy will maintain liquidity in China in order to keep backing growth. Authorities have warned that China`s recovery still faces uncertainty regarding global demand while the internal market`s recovery remains fragile and uneven.