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Global growth slackened over the month of December due, surprisingly, to weakness in the US. The press has suggested that the very weak December jobs report (74,000 new jobs against a recent monthly average of 180,000) is weather related. There is some support for this view in our own in house data, with housing starts and therefore construction also weak. However we have also noticed that retail and auto sales are slowing.
This too could be weather related, but it could also be an intimation of how the US economy will react to higher long term interest rates. Certainly the US housing market felt the chill wind of higher mortgage rates in the final quarter. For the time being we can call this a statistical blip but it cautions against some of the more optimistic predictions for economic growth in 2014. Deleveraging and high levels of unemployment remain substantive headwinds in the global economy.
Source : Grosvenor
