Economic Snapshot – Jan-Feb 2016
January was an extremely difficult month for the world’s financial markets with very sharp falls in the price of equities and commodities. Price volatility both within and between days was exceptionally high. These conditions were attributed to the surprisingly large fall in the price of oil, economic data
from China, the US Federal Reserve [Fed] lifting interest rates and concerns about the state of emerging economies. All this led to speculation about an imminent recession and even “the next leg of the GFC” with some extraordinary statements issued from a Bank Of Scotland analyst saying it is “time to sell
everything”.
In reality these comments appear more colourful than constructive, with the economic data revealing nothing to support that much pessimism. The markets continued to selectively misinterpret the data from China, and although the US manufacturing sector showed further signs of slowing, the household
sector remains robust. In Australia, the latest data confirmed recent improvements in the labour market, while inflation remained at the lower end of the Reserve Bank’s target range.