Week 15 | April 10- 14, 2023
Mr. Van Loven A. Abbu, LPT
United States (USD) Highlights:
US Inflation Eases For The Ninth Straight Month To 5%:
With a reading of 5% in March 2023, the annual inflation rate in the US continued to decline for the ninth month in a row. This rate is below market expectations of 5.2% and is the lowest since May 2021. Slower increases in food prices and falling prices for energy, notably for gasoline and fuel oil, were the main factors for the dip. However, the cost of housing, which accounts for nearly 30% of the CPI basket overall, has been rising. While the data provides some consolation for customers, it also underscores persistent supply chain disruptions, pandemic-related concern, and a slowdown in economic activity.The US Bureau of Labor Statistics reports that food prices increased at a slower rate in March—8.5% as opposed to 9.5% in February. Due to falls in the price of gasoline and fuel oil, energy costs decreased by 6.4%. Prices for used cars and trucks were also continuing to drop, this time by 11.6%. But inflation for housing, which makes up over 30% of the entire CPI basket, continued to increase, rising to 8.2% in March from 8.1% in February. Overall, the reduced rate of inflation is a hint of some comfort for consumers, but the economy will continue to be burdened by continued supply chain disruptions and pandemic-related uncertainties..
Source: U.S. Bureau of Labor Statistics
US Producer Prices Drop by 0.5% in March, Largest Fall in 3 Years:
The US producer prices for final demand fell by 0.5% on a monthly basis in March 2023, which was less than expected (no change). This was the worst monthly decline since April 2020. Prices for services also fell, driven by a large loss in margins for the wholesale of machinery and vehicles. The decline was mostly caused by reduced prices for final demand products, particularly gasoline. Producer prices climbed by 2.7% on an annual basis, which was less than market estimates of 3% and the worst pace since January 2021. Despite the lower-than-anticipated inflation figures, analysts still predict that there will be ongoing upward pressure on prices due to growing energy and labor costs, interruptions in the supply chain, and high demand across all industries.
The Bureau of Labor Statistics reports that the cost of final demand items fell by 1% in March, with energy costs being the main culprit. In addition to diesel fuel, residential natural gas, jet fuel, and electricity, gasoline prices decreased by 11.7%. While costs for medicinal preparations and processed chicken rose, prices for fresh and dried vegetables also decreased. Prices for services also decreased by 0.3%, which was due to weaker margins in the following sectors: truck transportation of freight, portfolio management, retailing of fuels and lubricants, loan services, and wholesale of vehicles, machines, and auto parts. In contrast to projections for a 0.3% gain, the core rate—which includes food, energy, and trade services—declined by 0.1% on a monthly basis. Despite the fact that inflationary pressures appear to have temporarily subsided in March, analysts predict that inflation will still be strong in the months to come as supply chain disruptions, a lack of available workers, and high demand continue to push up prices.
Source: U.S. Bureau of Labor Statistics
US Retail Sales Drop Sharply in March as Cost Pressures Mount:
In March 2023, retail sales in the US fell by 1% month over month, indicating that consumers are beginning to feel the pressure from rising prices and interest rates. This represents a greater decline than the downwardly revised 0.2% decline from the previous month and exceeds market forecasts for a 0.4% decline. The industries that had the largest drops in sales were gas stations, general merchandise stores, furniture, clothes, electronics, and appliance retailers. While sales at non-store merchants increased 1.9%, sales at food and beverage retailers only marginally declined. Core retail sales, which don’t include cars, petrol, building supplies, or food services but are crucial to understanding consumer spending in GDP, fell by 0.3%. Given that consumer spending makes up a sizable portion of the US economy’s GDP, the fall in retail sales raises the possibility that the US economy may be weakening.The total revenues at stores that sell goods and associated services to the ultimate customer are measured in the retail sales report, according to the US Census Bureau. Retail sales numbers, which make up about two-thirds of economic activity in the US, are a carefully followed economic indicator because they reveal the strength of consumer spending. A monthly survey of a representative sample of retail and food service businesses collects the data, which is then seasonally adjusted to paint a more realistic picture of consumer spending trends.
Source: U.S. Census Bureau
Australia (AUD) Highlights:
Australian Consumer Sentiment Surges 9.4% to 85.8 in April:
The Westpac-Melbourne Institute Index of Consumer Sentiment for Australia rose by 9.4% in April 2023, its highest level since June of the previous year. The boost was driven by the Reserve Bank of Australia’s decision to halt rate hikes, with consumers feeling more optimistic about the economy and their financial situation. The measure for economic conditions in the next 12 months saw the largest increase, surging 16.5% to 85.4, while the gauge for family finances in the coming year and family finances versus a year ago also climbed significantly. However, the chief economist at Westpac Group, Bill Evans, still characterizes consumer sentiment as weak and expects consumer spending to be lackluster through 2023 and the first half of 2024.
According to Reuters, the survey, which is conducted by Westpac-Melbourne Institute, is based on 1,200 interviews conducted over the first week of April 2023. The index measures consumer sentiment towards the economy, personal finances, and future economic prospects. The survey results provide valuable insight into consumer behavior and can have a significant impact on financial markets and government policies. The rise in consumer sentiment suggests a potential increase in consumer spending, which can stimulate economic growth. However, the chief economist’s cautious outlook highlights the need for continued monitoring of consumer sentiment and spending patterns.
Source: Westpac Banking Corporation, Melbourne Institute
Australia’s NAB Business Confidence Index Climbs to -1 in March:
In March 2023, the NAB business confidence index in Australia increased by 3 points to -1, above market forecasts for a decline to -2. While confidence in the mining and construction industries somewhat declined, the positive move was mostly driven by an improvement in attitude in the manufacturing sector. Retail, wholesale, and the financial sectors, however, remained negative, indicating doubts about the resilience of consumer spending. Overall, while appearing to have steadied, confidence is still below average, according to NAB Chief Economist Alan Oster. This hints to a cautious perspective for company, which can have an impact on employment and investment choices.The manufacturing industry, with a 9 point gain to +12, was the primary driver of the rise in business confidence, according to statistics from the National Australia Bank. The sectors of transportation and utilities, as well as recreation and personal services, had an improvement in sentiment of 6 and 5 points, respectively. The mining and construction industries, on the other hand, reported negative values of -5 and -12 points, respectively. The biggest drop in mood was in the retail sector, which dropped 5 points to -7. The next biggest drops were in the wholesale and finance, business, and property sectors, which each dropped 3 points to -3 and -1. The contradictory findings point to a lack of faith in the resilience of consumer spending, which might have an influence on the economy for some time to come.
Source: National Australia Bank
Australia’s Employment Gains Beat Forecasts, Up By 53,000 in March:
Australia’s employment climbed by 53,000 to 13.88 million in March 2023, above market estimates of a 20,000 increase. The improvement signaled the second consecutive month of job growth, showing that the labor market is still recovering. While part-time work decreased by 19,200, full-time employment climbed by 72,200. Nevertheless, there are worries about how supply chain disruptions and the ongoing epidemic may affect employment growth in the upcoming months, despite the good news.According to the Australian Bureau of Statistics, employment increased by 415,600, or 3.1%, from January to March, demonstrating the labor market’s resiliency in the face of the pandemic’s obstacles. Industries including healthcare and social support, education and training, and professional, scientific, and technical services were the key drivers of the increase in employment. However, employment in the mining sector fell throughout the course of the year. The most recent employment numbers indicate that the Australian economy is recovering from the impact of the epidemic, but there are still many unknowns and difficulties to be overcome.
Source: Australian Bureau of Statistics
Australia’s Unemployment Rate Steady at 3.5%, Employment Gains Exceed Forecasts:
Seasonally adjusted unemployment in Australia was 3.5% in March 2023, which was lower than market expectations of 3.6% and stable from February’s almost 50-year low. Despite this, the unemployment rate fell by 1,600 to 507,000, showing that the labor market is still rather tight. Additionally, employment rose by 53,000 to 13.88 million, above market expectations of a 20,000-percent growth. Part-time employment decreased by 19,200 to 4,135,600, while full-time employment increased by 72,200 to 9,748,900. There is still opportunity for additional people to join the labor market, as the participation rate held steady at 66.7%. The underemployment rate, however, jumped to 6.2% from 5.8%, showing that there are still a lot of individuals seeking work.The Australian Bureau of Statistics reports that the labor market in Australia is still strong and that the unemployment rate is still very low—nearly 50 years low. The labor market is in good shape, as seen by the fact that full-time employment, which increased by 72,200 in March, has been a major driver of the recent two months’ robust employment growth. The underemployment rate did, however, increase slightly to 6.2%, showing that there is still some slack in the labor market. The COVID-19 epidemic has had an influence on the Australian economy, so the upward trend in employment is encouraging. There is hope that the Australian economy will continue to improve as employment growth is anticipated to continue in the upcoming months.
Source: Australian Bureau of Statistics
Japan (JPY) Highlights:
Japan’s Consumer Confidence Reaches 33.9 in March 2023:
In March 2023, the Japanese consumer confidence index increased to 33.9, above the market’s forecast of 31.9 and hitting its highest level since May 2022. The strengthening of household sentiment across all indicators, namely income growth, employment, general well-being, and readiness to purchase durable goods, was what caused sentiment to rise. A positive development for Japan’s economy, which is recovering from the epidemic, is the increase in consumer confidence. Consumer spending may rise as a result of consumers’ improved financial outlook, which might accelerate economic development.
The consumer confidence index increased to 33.9 in March 2023 from 31.1 the previous month, above market forecasts, according to the Cabinet Office of Japan. The indicator gauges household spending intentions and economic optimism. A higher reading means that people are more likely to be upbeat about their financial outlook and to spend more money, which may help the economy thrive. The increase in mood across all indices suggests that consumers are feeling more optimistic about their overall financial health, employment prospects, and income. In the upcoming months, Japan’s economy may benefit from this upbeat outlook.
Source: Cabinet Office, Japan
Canada (CAD) Highlights:
Bank of Canada Maintains Policy Rate at 4.5% Amid Slowing Growth And Declining Inflation:
After indicating a pause in March, the Bank of Canada kept its overnight rate at 4.5% in April 2023. The central bank opted to support slowing growth because it thinks that existing borrowing costs are sufficient to restrain inflation to the 2% objective. Due to decreasing energy costs, inflation decreased to 5.2% in February. The bank anticipates that it will further drop to 3% by mid-2023 before gradually increasing to the goal by the end of 2024. The Bank of Canada also updated its projections for 2023, 2024, and 2025 GDP growth to 1.4%, 1.3%, and 2.5%, respectively. The bank declared it would keep an eye on the most recent economic statistics in order to decide on the policy rate in the future.The Bank of Canada predicts that the Canadian economy would likely expand by 1.4% this year, 1.3% in 2024, before increasing up to 2.5% in 2025. The central bank anticipates that inflation would gradually decrease to the desired level of 2% by the end of 2024, from its current rate of 5% by mid-2023. According to the bank’s revised monetary policy report, the ongoing pandemic and supply chain disruptions are the major reasons why risks to the outlook are still leaning to the downside. The bank’s decision to maintain rates at their current levels was in line with market forecasts, as the majority of analysts anticipated the bank would remain stable until the end of the year.
Source: Bank of Canada
United Kingdom (GBP) Highlights:
UK GDP Stalls in February 2023 as Services Sector Declines:
In February 2023, the British economy failed to expand, slowing the nation’s economic recovery. Due to cutbacks in education, public administration, and defense spending, both the services sector and production output decreased. However, production in services geared toward consumers increased, helped by retail sales. Due to private home repair and maintenance as well as non-housing repair and maintenance, the construction industry had a considerable uptick and reached a record level. The month-over-month drop indicates probable difficulties in the future even though the three-month growth rate remained positive. The GDP of the UK is currently thought to be 0.3% higher than it was before the coronavirus.
Data from the Office for National Statistics show that the UK GDP remained unchanged in February 2023, falling short of forecasts for a 0.1% gain. The UK’s 80% service-based economy shrank by 0.1%, with the primary causes of the decrease being public administration, education, and the defense industry. Private home repair and maintenance, as well as non-housing repair and mmaintenance drove the construction sector’s growth of 2.4% to a record high of £15,558 million. The supply of electricity, gas, steam, and air conditioning fell by 2.2%, while manufacturing output fell by 0.2%. Retail commerce drove a 0.4% increase in consumer-facing services output, with the exception of motor cars and motorcycles. The three-month growth rate increased by 0.1% despite the month-over-month drop. The UK GDP is now expected to be 0.3% higher than it was before to the coronavirus, but the flat growth in February warns of possible economic headwinds.
Source: Office for National Statistics
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