This Week's State Of The Economy - What Is Ahead? - 07 August 2020

By: Taro Chellaram /Wells Fargo Economics & Financial Report/Aug 11, 2020

This Week's State Of The Economy - What Is Ahead? - 07 August 2020

Global - Global Economy Continues to Recoup Lost Ground

  • There were more signs of global recovery this week and PMI surveys improved further across the world. Indeed, the global manufacturing and services PMIs rose above the break even 50 level, suggesting the global economy has returned to positive growth in Q3.
  • The Euro zone economy showed increased momentum in June as retail sales returned to pre-pandemic level and industrial output rose for the region’s four largest economies. We expect that improved Euro zone momentum carried into Q3. Meanwhile, the recovery is slower in Latin America, where Brazil and Mexico both still appear to be contracting. 

U.S. - Service Elevator

  • Despite rising virus case counts in July, unexpected strength in the service sector was evident in the economic data this week.
  • The better-than-expected July jobs report was driven primarily by hiring in the service sector, which accounted for 1.42 million of the overall 1.76 million jobs added in the month.
  • The ISM index for the service sector was arguably the biggest economic surprise of the week climbing to 58.1 with some sub components reaching multi-year highs.
  • It remains a long road to recovery and the virus still sets the timetable, but numbers moved in the right direction this week.



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