Economy: Robust construction sector in the USA

The construction sector in the USA has gained further momentum, making up for the weakness in industry. The leading indicators in the eurozone do not point to any further slowdown in growth. The positive signals from industry have been confirmed in China.

  • Industry sent out mixed messages for December. The purchasing managers index for industry – which had dipped to its lowest level for ten years in September – once again exceeded the growth threshold of 50 points in December. By contrast, the industry indicator produced by the Swiss Economic Institute fell again. The figures for the retail sector were clearer. Sales in December remained at the same level as in December 2018. The figures once again revealed the weak momentum in Swiss consumer spending.

    Further interest rate cuts in 2019 failed to provide the domestic construction industry with additional impetus. The construction industry in Switzerland has been buoyant for some time and a further upturn seems unlikely due to stagnating immigration and increasing vacancy rates. This means the overall outlook for growth in the Swiss economy remains subdued.

    Growth, sentiment and trend

    In percent

    The graphic shows the actual annual growth in Swiss gross domestic product (GDP) since 1995, its long-term trend and a leading economic climate indicator. The Swiss economy is currently growing slightly below the long-term trend. Leading indicators suggest that growth rates will remain at a similar level for the time being.
    Source: Refinitiv, PostFinance
  • The manufacturing sector remains the greatest concern in the US economy. Industrial production figures were once again negative in December and the sentiment indicator dropped once more. However, the US economy remains robust overall. This is true of both the labour market – which posted positive figures again in December – and consumer spending, which continues to rise steadily.

    The real estate sector performed particularly well in December. The number of newly started private housing developments was up by almost 17 percent compared to November. This is the strongest rise in construction projects in 13 years.

    Growth, sentiment and trend

    In percent

    The graphic shows the growth in real US GDP, its long-term trend and a leading economic climate indicator since the mid-1990s. The growth of the US economy is in line with long-term, sustainable growth, i.e. trend growth. Growth rates are expected to be at a similar level over the coming months.
    Source: Refinitiv, PostFinance
  • After industrial production proved disappointing again in November, it rose slightly in December by 0.2 percent compared to the previous month. According to European Commission figures, sentiment indicators for European industry have remained at a low, yet constant level since September. This suggests European industry has bottomed out before the US. The fact that the eurozone has been largely unaffected by trade disputes has helped in this respect.

    The construction industry’s performance was also encouraging in the eurozone. This applies to both construction output over recent months as well as the leading sentiment indicators. This means the construction industry – in addition to strong consumer spending – is also making a major contribution to stabilizing growth in the eurozone.

    Growth, sentiment and trend

    In percent

    The graphic shows the growth in real GDP, its trend and a leading economic climate indicator for the eurozone since 1995. Our economic indicator shows a slight upturn in momentum since the start of the year. This is attributable to an improved outlook in the construction and services sectors as well as no further deterioration in the prospects for industry.
    Source: Refinitiv, PostFinance
  • Our forecast for China, which has been positive for some time, was confirmed by recently published figures. Industrial production rose surprisingly sharply, up 6.9 percent year-on-year. In August industrial output had recorded the lowest increase in over 17 years. Imports and exports also climbed significantly in December. The official figure of 6 percent for the fourth quarter was as steady as could be expected.

    India’s economic performance has raised greater concerns. Here growth stood at just 4.50 percent recently. India would actually need to achieve growth of at least 6 percent to create enough jobs for the rapidly growing working population. The low growth is attributable to upheaval due to poorly planned political reforms and a longstanding crisis in the banking sector which is holding back lending.

    Growth, sentiment and trend

    In percent

    This graphic shows the growth in real GDP, its trend and a leading economic climate indicator for an average of emerging markets since 1995. The economic outlook in the emerging markets overall has improved slightly again over recent months. This is in large part due to China.
    Source: Refinitiv, PostFinance

Global economic data

Indicators Switzerland USA Eurozone UK Japan India Brazil China    
Indicators
GDP Y/Y 2019Q2
Switzerland
0.2%
USA
2.3%
Eurozone
1.2%
UK
1.2%
Japan
0.8%
India
5.0%
Brazil
1.1%
China   
6.2%
Indicators
GDP Y/Y 2019Q3
Switzerland
1.1%
USA
2.1%
Eurozone
1.2%
UK
1.1%
Japan
1.9%
India
4.5%
Brazil
1.2%
China   
6.0%
Indicators
Economic climate
Switzerland
=
USA
=
Eurozone
=
UK

Japan
India
+
Brazil
+
China   
+
Indicators
Trend growth
Switzerland
1.5%
USA
1.7%
Eurozone
1.0%
UK
1.6%
Japan
1.0%
India
5.6%
Brazil
0.9%
China   
6.1%
Indicators
Inflation
Switzerland
0.2%
USA
2.3%
Eurozone
1.3%
UK
1.3%
Japan
0.5%
India
7.3%
Brazil
4.3%
China   
4.5%
Indicators
Key rates
Switzerland
–0.75%
USA
1.55%
Eurozone
0.0%
UK
0.75%
Japan
–0.10%
India
5.15%
Brazil
4.50%
China   
4.35%

Source: Refinitiv, PostFinance

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