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Fresh data highlight two-speed nature of global recovery


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Good evening from London,

A fresh batch of indicators and economic forecasts has once again highlighted the uneven nature of the global recovery from coronavirus.

In the eurozone, consumer activity is now back at pre-pandemic levels, according to new FT analysis of unofficial yet timely high-frequency data. Europeans are shopping and going out more and increasing their use of public transport, as high Covid-19 vaccination rates fuel confidence, schools reopen and workers return to offices.

Nomura predicts growth of 2.3 per cent for the bloc in the third quarter, following recent upgrades from the OECD. But Europe is not out of the woods just yet. Recovery still lags behind the US and China and manufacturers still face a host of supply chain problems.

But even in the US, recovery prospects are hedged with concerns over the highly infectious Delta variant of coronavirus, which has caused consumer confidence figures to hit a seven-month low, according to data published yesterday.

Line chart of % change over the same week two years before, rolling 4-week average showing the OECD weekly tracker of economic activity is improving

The picture is much starker for the Asia-Pacific region, where the World Bank has drastically cut forecasts for 2021 (excluding China) by two percentage points to 2.5 per cent because of the growth of Delta cases and lacklustre vaccination programmes. Poorer households are bearing the brunt of the slowdown.

A good example is Vietnam, which today reported a record drop in GDP of more than six per cent in the third quarter, as the country struggles to cope with the surge in infections around the pivotal Ho Chi Minh City business area.

Meanwhile, a rise in cases in Australia has prompted businesses, including BHP, Macquarie and Qantas, to warn that the resulting lockdowns were creating “long-lasting” economic problems.

Echoing complaints heard in western capitals earlier in the pandemic, the Business Council of Australia argued that “as vaccination rates increase, it will become necessary to open up society and live with the virus, in the same way that other countries have done”.

Latest news

  • The French government said it would propose an extension of the country’s state of emergency, allowing it to impose lockdowns until the summer of 2022

  • The UK Petrol Retailers Association said there were signs that the crisis at the pumps was easing, with only 27 per cent of members reporting being out of fuel (Reuters)

  • European banks have closed the gap on reaching new global capital standards after pandemic restrictions on dividends boosted balance sheets last year

For up-to-the-minute coronavirus updates, visit our live blog

Need to know: the economy

US Democrats are scrambling to raise the US debt ceiling and avoid a “catastrophic” default after Republicans blocked an increase in spending limits. Treasury secretary Janet Yellen has warned that the government will run out of money to meet its obligations to debtholders on October 18.

Stocks steadied today after inflation fears yesterday led European shares to their steepest drop in two months and Wall Street to its worst day since May. Investors were spooked by policymakers’ suggestions that interest rate rises could come sooner than expected, in addition to sharp rises in oil and natural gas prices.

Latest for the UK and Europe

European Central Bank president Christine Lagarde has distanced the ECB from the trend towards monetary tightening at other central banks, promising not to “overreact to transitory supply shocks” driving up inflation.

The pioneering vaccine work at universities during the pandemic highlighted the UK’s research strengths, but could the country become a “scientific superpower”? Science editor Clive Cookson assesses the evidence in our series on whether prime minister Boris Johnson’s reforms could change the face of Britain. The government announced today it would ease regulations on the gene-editing of crops in a post-Brexit departure from EU rules.

Global latest

The global bond market is set for its worst month since early 2021, as investors dump government bonds after the US Federal Reserve and the Bank of England edged towards a tightening of policy. Veteran investor Mohamed El-Erian wrote in the FT that the bond sell-off was a clear warning to the Fed that the longer the “tapering” of its pandemic measures were delayed, the greater the risk of market disruption.

Line chart of 10-year government yields (%) showing bond yields have leapt higher

Need to know: business

An “Avengers assemble” moment is how UK small business minister Paul Scully described his all-star panel created to help the hospitality sector recover from the pandemic. A letter published in the FT from more than 65 industry leaders warned that the sector was “close to imploding” because of labour shortages following Brexit and the pandemic. Watch our film on how restaurants are coping with staffing and supply chain problems.

Clothing store Next has upgraded its forecast for the fourth — yes, fourth — time this year and said full-year profits would hit a five-year high of £800m after trading “materially exceeded expectations” in the first half of the year. The UK grocery sector meanwhile faces a big moment on Saturday, when the outcome of the takeover battle for Wm Morrison, the country’s fourth-largest supermarket chain, will be decided at a one-day auction.

As with retail’s shift to digital, the drinks industry is another example of how the pandemic has fuelled trends that were already under way. Against a backdrop of falling overall consumption, premium producers have thrived as locked-down consumers treated themselves to deluxe drinks. At the same time, alcohol-free options have gained ground among the more health-conscious. “Drink better, not more” has become the industry’s rallying cry, writes chief business commentator Brooke Masters.

Line chart of annual alcohol consumption per capita (litres) showing drinking habits across the world are converging

The world of work

For those of you taking stock after another strange year and thinking about starting out on a new venture, start-up investor June Angelides offers some tips on how to build your business.

Covid cases and vaccinations

Total global cases: 232.7m

Get the latest worldwide picture with our vaccine tracker

And finally…

Touch, the least vaunted of our senses, is also the worst-served by the modern world, writes columnist Janan Ganesh, who looks back fondly at the tactile — if limited — experience offered by the BlackBerry. For a short period, he writes, the device stood for a golden age of the web before smartphones helped social media mutate from Speaker’s Corner to Gin Lane.

An old BlackBerry model
Whaddya mean, you’ll tweet it? © Getty

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