SCOREBOARD: Misplaced pessimism

Despite recent volatility, a series of strong economic and commodities figures has been unable to snap the malaise of economic pessimism.

Amid all the volatility the one seemingly unbreakable consistency has been how misplaced economic pessimism has been. Just as Australia was bracing for the third recession that we never had – the mining chapter – iron ore prices rebound and now it seems that Chinese trade figures are improving. Production figures from Rio Tinto, BHP Billiton and Fortescue this week will be interesting. It’s not that Chinese trade is surging, although exports were around twice the expectation at 9.9 per cent year on year. It’s just that 10 per cent growth can’t be described as weak, noting that something around 20 per cent has been the norm previously. These numbers can’t be looked at in isolation though. We’ve seen a rebound in European industrial production (latest figure Friday night show a 0.6 per cent lift in August after 0.6 per cent previously), the US ISM has turned and the all-important employment figures show strong jobs growth – equal to what we saw prior to the GFC. Just as the IMF says growth is slowing, most of the tier one data suggests the opposite.

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