Week 4 | January 23-29, 2023
Mr. Van Loven A. Abbu, LPT
SUMMARY
United States (USD) Highlights:
The number of Americans filing new claims for unemployment benefits fell by 6,000 – the lowest since April:
In the week ending January 21st, the number of Americans submitting new claims for unemployment benefits decreased by 6,000 from the previous week’s downwardly revised total to 186,000, the lowest amount since April and much below the forecasted 205,000. Despite significant layoffs in the IT sector and the Federal Reserve’s aggressive tightening route last year, the outcome strengthened the case for a strong job market. Since early May, the 4-week moving average, which eliminates week-to-week volatility, has dropped by 9,250 points to 197,500. Initial claims decreased by 63,849 to 224,481 on a non-seasonally adjusted basis, with notable drops in California (15,033) and New York (4,975).
Source: U.S. Department of Labor
Core PCE Price Index went up by 0.3% month-over-month in December of 2022:
In December 2022, core PCE prices—which do not include food and energy—increased by 0.3% month over month, compared to a 0.2% increase in November and in line with market expectations. The Federal Reserve’s favored inflation indicator, the annual rate, increased at the weakest rate in 14 months, from 4.7% in November to 4.4% in December. The headline index, meanwhile, increased by 0.1% last month, matching its increase from November. The index climbed by 5.0% in the 12 months ending in December, the smallest growth since September 2021, and it fell below 5.5% in November.
Source: U.S. Bureau of Economic Analysis
University of Michigan’s consumer confidence index for the US was revised up to 64.9 in January 2023, the highest reading since April:
The preliminary reading of 64.6 for the University of Michigan’s consumer confidence index for the US was revised up to 64.9 in January 2023, the highest reading since April. While the present conditions subindex was revised lower to 68.4 from 68.6, the expectations gauge increased to 62.7 from 62. In the meanwhile, the 5-year prognosis was downgraded to 2.9% from 3% and the inflation projections for the year were reduced lower to 3.9% from 4% in the preliminary estimate.
Source: University of Michigan
Canada (CAD) Highlights:
Bank of Canada increases the overnight rate to 4.5%: indicating the end of its aggressive tightening cycle:
As anticipated by the markets, the Bank of Canada increased its target overnight rate by 25 basis points to 4.5% at its first meeting of 2023, indicating the end of its aggressive tightening cycle assuming economic conditions largely coincide with the central bank’s expectations. The Bank further stated that in order to complement the restrictive attitude of the policy rate, it is also maintaining its quantitative tightening policy. Policymakers emphasized that despite decreased gasoline prices causing inflation to drop to 6.3% in December from a record of 8.1% in June, families nevertheless felt the strain of rising inflation as food and housing prices increased. Even so, although they are expected to decline dramatically later in the year, short-term inflation expectations are still expected to be high. The bank predicts that the Canadian economy expanded by 3.6% in 2022, but that growth would likely slow through the middle of this year before picking up again in the second half.
Source: Bank of Canada
EUROZONE (EUR) Highlights:
GfK Consumer Climate Indicator up to -33.9 in February 2023:
The GfK Consumer Climate Indicator for Germany increased to -33.9 as of February 2023 from a slightly corrected -37.6 in January and contrasted to a -33.0 market forecast. The most recent rating, which indicated a fourth consecutive month of improvement in sentiment with a decline in oil costs, was the highest since August 2022. Both income expectations (-32.2 vs -43.4) and economic circumstances (-0.6 vs -10.3) improved. In the meanwhile, consumers’ propensity to buy dipped marginally (-18.7 versus -16.3) as they anticipated increased heating costs in the months to come. In October 2022, the index fell to a record low of -42.8.
Source: GfK Group
Ifo Business Climate indicator up 1.6 points in January to 90.2:
The Ifo Business Climate indicator for Germany increased by 1.6 points from the previous month to 90.2 in January 2023, the highest level since June of last year and the fourth month of growth. The biggest economy in Europe began the year with cautious confidence as supply chain stress eased and inflation began to decline. Compared to December, expectations for the next few months were much less gloomy (86.4 vs. 83.2), although assessments of the existing state of affairs by businesses have shifted somewhat to the negative (94.1 vs 94.4). Manufacturers’ confidence improved (-0.7 vs -5.7), as did service providers’ (-0.2 vs -1.2), traders’ (-15.4 vs -20.0), and builders’ (-0.2 vs -1.2). (-21.6 vs -21.9). The Ifo anticipates a minor decrease in the first quarter, mostly because of a drop in consumption, although a recession is likely averted.
Source: Ifo Institute
AUSTRALIA (AUD) Highlights:
Australia’s annual inflation rate increased to 7.8% in Q4 of 2022 – the biggest print since the first quarter of 1990:
Australia’s annual inflation rate increased to 7.8% in Q4 2022 from 7.3% in Q3 and was higher than the market expectation of 7.5%. This was the biggest print since the first quarter of 1990, helped by rising prices for food, gasoline, and new homes. Since Q3 of 2006, food costs have risen the greatest (9.2% vs. 9.0%). Transport (8.0% up from 9.2%), housing (10.7% up from 10.5%), alcohol & tobacco (4.4% up from 4.0%), furniture (8.4% up from 7.7%), recreation (9.0% up from 5.0%), health (3.8% up from 2.7%), and insurance & financial services (5.0% up from 4.2%) all saw higher price increases. Consumer prices increased 1.9% on a quarterly basis in Q4 after rising 1.8% in Q3, setting a record for the fourth straight quarter since the Goods and Services Tax was implemented in 2000. The RBA Trimmed Mean CPI increased 6.9% year over year, the quickest rate since the series’ inception in 2003, falling short of the central bank’s 2-3% objective. The index rose 1.7% from one quarter to the next.
Source: Australian Bureau of Statistics
Australia’s NAB Business Confidence index is up 3 points but still below the long-term average:
The NAB business confidence index for Australia increased by three points to -1 in December 2022, although it continued to be below its long-term average and in the red for the second consecutive month. With the exception of transportation and utilities, sentiment improved across most industries. As a result of declining sales (18 vs 27), profitability (12 vs 19), and employment, business conditions declined for a third month (12 versus 20 in November) (8 vs 13). All industries moderated, and the fall was widespread. With forward orders edging down (3 vs. 5) and capacity utilization easing over normal at 83.7%, leading signs showed conditions would loosen even further. Cost and price increases slowed down yet continued to be high. Even yet, activity is still strong, according to NAB Chief Economist Alan Oster. We are aware that the entire impact of rates has not yet materialized, therefore the poll should show us how quickly that impact will be seen in the upcoming months.
Source: National Australia Bank
NEW ZEALAND (NZD) Highlights:
New Zealand’s annual inflation rate increased to 7.20% in Q4 of 2022 – unchanged in the Q3 of 2022:
In New Zealand, the inflation rate increased by 7.20 percent YoY in the fourth quarter of 2022 and remained at the same level as in the third quarter of 2022 (7.20 percent). For food (10.7% compared to 8% in Q3), alcohol and tobacco (5.9% vs. 4.7%), household goods (8.2% vs. 7.1%), and health (8.2% vs. 7.1%), prices increased more quickly. In contrast, inflation decreased for transportation (8.2% vs. 7.1%), housing and household utilities (8.7% vs. 8.7%), and both. In the interim, communication costs decreased (-0.3% vs. +3.1%). In the December quarter, the consumer price index increased by 1.4% from one quarter to the next.
Source: Statistics New Zealand
New Zealand’s ANZ Business Outlook Index bounced from its record low of -70.2 in December to 18 points in January 2023:
In January 2023, the ANZ Business Outlook Index in New Zealand increased 18 points to -52 from a record low of -70.2 in December as the shock of the November rate rise and claims of a “deliberately constructed” recession seemed to have subsided. Indicators, however, continued to be quite low. Manufacturing, services, and retail showed the largest gains in activity indicators following their declines in December. Price intents and cost expectations were rising, and inflation expectations were staying steady at about 6%, thus inflation and pricing pressures continued to exert a firm grip. The majority of indicators showed improvement in January, including Own Activity Outlook (-15.8 in Jan vs -25.6 in Dec), Export Intentions (-5.4 vs -10), Investment Intentions (-13.7 vs -20.5), Employment Intentions (-11.1 vs -16.3), and Profit Expectations (-42.6 vs -52.7).
Source: ANZ Bank New Zealand
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