A big day for data today. We started off with a number of Markit Manufacturing PMI reports. The full round of releases won't be completed until early next week but highlights so far include higher China & UK data (51.7 and 49.6 respectively), although the UK would likely have been affected by Brexit stockpiling ahead of the end of the month.
The all important Nonfarm payroll report for October came in at +128k, against expectations of +85k and a (moderately) revised +44k change for September. Average hourly earnings were up 0.2%mom (versus expectations of 0.3%) and 3% yoy, and the unemployment rate was up marginally at 3.6%. Treasury yields are little changed after the release with the 10 year currently at 1.71%.
While attention is focussed on payrolls, almost nobody is focussing on a much more important fact - the US working age population is shrinking. As a consequence, other things being equal, a reduction in the working age population will lead to lower spending going forward and with it a decline in the US growth rate. This is nothing new in the sense that the rate of growth in the US working age has been declining from a peak of 2.24% in July 2000. More recently though slowdown has turned into an outright decline with the negative year on year numbers throughout 2019. The latest reading is only minus 0.2%, but nevertheless negative growth in the working age population comes with economic consequences.
Unfortunately for the global economy, the US demographic data is much better than elsewhere. Germany, China and Japan are all seeing a decline in their working age populations and those countries alone are expected to see a decline of 400 million by 2100 according to the latest figures from the UN. However, it is Europe that has the greatest problems though with Italy, Spain, Portugal, Bulgaria, Greece and Lithuania seeing declines of more than 30% by 2030 when migration is excluded. These are shockingly large numbers and without huge influx of people from other countries, it is going to put government finances in these countries under considerable strain.