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Daily Economic Briefing: February 8, 2010

Daily Economic Briefing: February 8, 2010

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Global data summary

• The US payroll report appears to have had a calming influence on markets. Although the 20K payroll job loss was near consensus, the details of the report were positive, including the increasingly solid trend in the growth of hours worked and labor income. Equally important, the likely precursors of hiring, including a rising workweek and the use of temps, are flashing green. The accompanying chart shows that the growth of hours worked recently has broken with the jobless recoveries of 1992 and 2002, and is tracking more closely in line with the robust employment and GDP recoveries of 1975 and 1983. This week we will learn a bit more about state of the US labor market via tomorrow’s JOLTS survey and Thursday’s jobless claims report.

• Japan’s Cabinet Office reported that its proxy for NIPA-based real consumer spending rose 0.6%m/m, underscoring the importance of using this index to track consumer spending rather than the index of household expenditures or retail sales. The consumption proxy rose 2.5% for 4Q as a whole, the same as 3Q, and higher than we had assumed (1.5%). More generally, it is noteworthy that Japanese consumption growth has grown at a reasonably strong pace over the past 3 quarters, above that of the US and especially Europe (see page 2). That said, Japanese consumption fell much harder in 2008 for reasons that we do not fully understand.

• Japan’s Economy Watchers survey continued to rebound in January, similar to the other business surveys. Our Japan team has said that a recovery in the business surveys is necessary to confirm their view that the expansion is being maintained. Sentiment was hit hard in late 2009, and our team attributed this in part to the tightening in financial market conditions (soaring yen, falling stock maket). Domestic financial conditions improved sharply in December and early January, although they have given back some ground since.

• Taiwan reported a booming 12.7%m/m increase in exports in January, which is likely to be a precursor to last month’s performance across much of EM Asia. The outsized gain reflects a combination of good underlying momentum in external demand and the front-loading of activity ahead of the February Lunar New Year holidays (which occur next week) Taiwan’s data feature an impressive broadening in the growth of exports by destination from China and other Asia to the US and Europe.


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