Currently, the world’s two largest economies are following opposite paths.
While the US lands continue to show signs of warming, which is not very positive for the country’s central bank, the Chinese have accumulated negative data in recent weeks.
In recent days, information released on the United States economy confirms an affirmative sequence: retail sales, although practically stable, have increased by 0.7%, excluding fuel.
Here, it is easy to see how the country wants and is able to consume: after the ninth consecutive drop in fuel prices, consumers took advantage of the slack in the budget to buy other products. It is not by chance that furniture, electronics and electronics registered significant increases in the month of July, as shown by numerous surveys.
This phenomenon is directly linked to a very heated job market. The fact is that if all the unemployed Americans were performing some function, it would still not be enough to fill all the vacancies: 1.8 for each person looking for work.
In addition, there are 19 consecutive months of net job creation; in July alone, more than half a million vacancies were created. This table shows the strength of the labor market in that country, which deals with only one limiting fact: gross salary increases are no longer keeping up with inflation, which runs above 8% per year (yy).
The number of jobless claims also remains low, at around 246,000 weekly – slightly higher than before the pandemic, when it reached 220,000, but still very low.
In addition, industrial production in July increased by 0.6%, highlighting the significant increases in the automotive (6.6%) and manufacturing (0.7%) sectors. The US industry has recorded the highest level in history, with installed capacity utilization at 80.3%, a dangerous level for inflationary pressures.
At this juncture, only the real estate sector is suffering the impacts of high interest rates, although it still shows extremely encouraging levels. Although the average price of a home has dropped from US$413,800 to US$403,800, it is still 10% above the same period last year, meaning the adjustment is quite slow.
On the other hand, China has been facing some problems. Following the example of the real estate sector, in terms of launches, there was a general drop of almost (absurdly!) 50% in one year. This greatly limits the finances of provincial governments, which derive most of their income from the sale of land.
On the other hand, retail sales, although they rose 2.7% in July, frustrated market expectations (5%), given that the base is very low. The same happened with industrial production: a rise of 3.8%, but lower than expected (4.6%). Meanwhile, car sales dropped 9.7%, and e-commerce fell 10%.
Furthermore, unemployment among younger Chinese is already over 20%. The country is not in a worse situation because exports are growing by almost 20%.
All these discouraging aspects are already causing revisions to the projection of the Chinese Gross Domestic Product (GDP) for 2022, with the number reaching 3.5%, contrary to the target of 5.5%, foreseen by the government of the Asian giant.
We are therefore living through a curious moment: growth and high inflation in the United States and a storm in China. Of course, this condition shouldn’t last long, but it still attracts attention.
