Yesterday, the world breathed a collective sigh of relief as news broke about the improve of china-us relations. The China and the US had agreed to start two working groups in order to improve their economic relations. This move follows months of escalating tensions between the two countries which threatened to spiral out of control if not addressed. After the development of China-US relations the first group will focus on commercial interests, with private businesses driving the negotiations, while the second will focus more on respective export policies.
China and US relations
This development is undoubtedly a welcome one as the global economy has been reeling from the return to protectionist policies and dire economic conditions in many countries. Markets have responded favourably, buoyed by this break-through. However, there is still much work that needs to be done if these relations are to remain stable going forward.
In the US, the Manufacturing Recession continues as the Federal Reserve Bank of Dallas’ general business activity index for manufacturing in Texas remains deep in lockdown levels at -17.2. This reflects similar data from surveys across other sectors which indicate that US manufacturing is on its knees and with no chance of a quick recovery. Despite attempts to spin this situation into something more positive, the facts are clear and it is a worrying trend.
Australia’s Retail Sales Strengthen
On the upside, Australia’s Retail Sales were up an impressive 0.5% in July. This marks some stabilisation after last month’s whopping 0.8% drop and average growth of just 0.1% over the past six months reveals how much work still needs to be done to rebuild the sector. Department stores remain especially weak, but restaurants and cafes showed small growth which may be due to price hikes rather than an increase in volume of customers.
Overall, yesterday was a good news day with China-US relations improving and Australia Retail Sales strengthening. It serves as a reminder however that economic data for many countries still remains concerning and more needs to be done if the global economy is to truly recover. This includes further action from both China and the US on their working groups as well as additional steps taken by other countries in order to stimulate their economies and reduce protectionist policies. With hope, this will be enough to see everyone through these troubling times.