Brief: Macro Threads for the US, Europe, and China

Mobius Intel Brief:

This week’s macro data threads show diverging 2025 energy and industrial demand signals in the US, Europe (Germany), and China.

United States: Relatively upbeat November retail sales data (+0.7% M/M, +3.8% Y/Y) provided bullish contrast to Tuesday’s industrial activity readings.

• US industrial production fell for the third-consecutive month in November, dropping -0.1% M/M following a downwardly revised -0.4% in October and cutting the annualized change in industrial production to -0.9% Y/Y.

• Beneath the hood, US industrial capacity utilization fell to 76.8% — the lowest since April 2021 and a 2YR trajectory consistent with US recessions.

• While service sector strength could disrupt this recession pattern, the recent slowdown in industrial output and capacity utilization will likely be reflected in near-term industrial fuel/material demand.

China: Reuters sources reported that Chinese officials agreed to raise 2025’s budget deficit to 4% of GDP — the highest on record — in preparation for potential Trump administration tariffs.

• Meeting notes indicate the People’s Bank of China (PBoC) plans to loosen monetary policy next year to ensure existing and forthcoming stimulus measures have their intended effect on economic growth.

• As noted in yesterday’s DMU, China’s latest crude demand and retail sales data provided another set of discouraging headlines. The market’s growing indifference to China’s extended economic malaise could lead to a slow or discounted response to signals of effective stimulus on consumption in 2025.

Germany: Germany provided another round of bearish anecdotal data for commodity market participants to digest as the Ifo and ZEW Institutes reported “chronic weakness” in the German economy.

• While Germany’s deteriorating economy poses clear knock-on effects for the broader EU energy demand outlook, its prolonged downward trend has gained relevance in the near-term geopolitical landscape after the collapse of Chancellor Scholz’s anti-nuclear/anti-gas traffic-light coalition.

• Scholz’s top competitors in the race are presenting policies centered around cheaper energy and reduced regulation — factors that could support EU demand for US energy if these parties win Germany’s snap election on February 23.

This commentary contains our views and opinions and is based on information from sources we believe are reliable. This commentary is for informational purposes, should not be considered investment advice, and is not intended as an offer or solicitation with respect to the purchase and sale of commodity interests or to serve as the basis for one to decide to execute derivatives or other transactions. This commentary is exclusively intended for Mobius clients and is not considered promotional material.