Week 6 | February 6 – 12, 2023
Mr. Van Loven A. Abbu, LPT
SUMMARY
Canada (CAD) Highlights:
Ivey PMI in Canada Soars to 60.1 in January 2023, Marking a 4-Month High:
The Ivey Purchasing Managers Index in Canada rose to 60.1 in January 2023 from 49.3 the previous month, above analysts’ predictions of 42.3. It was the highest number since May 2022, as enterprises increased their staff at a quicker rate (60.5 vs. 59.5 in December), but inventories decreased (52.7 vs. 53.9). Simultaneously, the rate of inflation fell to 63.6 percent from 67.5 percent, but supplier deliveries were slower than the previous month (52.3 from 49.1).
Richard Ivey School of Business
Rising Inflation, Energy Prices, and Demand Push US Trade Deficit to $948.1 Billion in 2022:
The US trade deficit increased to $67.4 billion in December 2022, up from a downwardly revised $61 billion in November, the lowest since September 2020. Figures compare to estimates of a $68.5 billion shortfall, with exports declining 0.9% to $250.2 billion, led by nonmonetary gold, crude oil, and foods, feeds, and drinks, while imports increased 1.3% to $317.6 billion, driven by mobile phone and passenger vehicle sales. In all, the US trade deficit increased to a record high of $948.1 billion in 2022, equivalent to 3.7% of GDP, from $845 billion in 2021, as increasing inflation, high energy prices, and healthy demand drove imports to their highest level ever. The goods trade deficit increased by 9.3% to $1191.8 billion, while the services surplus decreased by 0.6% to $243.7 billion. Goods exports grew 17.7% to $2,085.6 billion, while imports increased 16.3% to $3,277.3 billion, driven by crude oil. The deficit with China increased to $382.9 billion, while the deficit with Canada increased to $81.6 billion.
Bureau of Economic Analysis (BEA)
Canada’s Labor Market Remains Tight with Unemployment Rate Holding Steady at 5%:
The Canadian unemployment rate remained stable at 5% in January 2023, barely shy of the record-low 4.9% seen in June and July 2022, and well below market expectations of 5.1%, indicating that the Canadian labor market remains persistently tight. The overall number of jobless persons was at 1.0 million, which was the same as it had been since the summer of 2022. The unemployment rate fell (-0.1 percentage point to 4.1%) among persons aged 25 to 54, while it rose (+0.2 percentage point to 4.5%) for those aged 55 and older and remained unchanged for those aged 15 to 24. In January, 63.9% of the jobless had been out of work for a relatively short period of time – between 1 and 13 weeks. Long-term unemployment was 15.8% in January 2022, down from 19.9% in January 2021. Meanwhile, employment climbed by 150,000, and the labor force continued to expand, with an additional 153,000 persons joining the labor market, raising the participation rate to 65.7%.
Source: Statistics Canada
Employment Soars in Canada with 150k New Jobs in January 2023:
In January 2023, the Canadian economy added 150 thousand jobs, the biggest since February of the previous year and much above market projections of a 15 thousand gain. Gains were led mostly by those aged 25 to 54 (+100,000; +0.8%), who were split equally between men and women. Employment grew among those aged 55 and older (+43,000, +1.0%), while it remained stable among those aged 15 to 24. The most jobs were added in Ontario (+63,000; +0.8%), Quebec (+47,000; +1.1%), and Alberta (+21,000; +0.9%). Employment in Newfoundland and Labrador fell (-2,300; -1.0%). Gains were seen in a variety of areas, with wholesale and retail commerce (+59,000; +2.0%), health care and social assistance (+40,000; +1.5%), and educational services (+18,000; +1.3%) leading the way. Simultaneously, employment in transportation and warehousing fell (-17,000; -1.7%). Employees increased in both the private (+115,000; +0.9%) and public (+32,000; +0.8%) sectors.
Source: Statistics Canada
Australia (AUD) Highlights:
Robust Sales of Iron Ore and Natural Gas Can’t Keep Australia’s Trade Surplus from Shrinking in December:
Australia’s trade surplus fell to AUD 12.23 billion in December 2022, down from a five-month high of AUD 13.47 billion in November and falling short of market expectations of a AUD 12.5 billion increase. It was the smallest trade surplus since August, as exports declined amid rising global cost pressures and imports increased despite improved supply chain conditions following China’s removal of severe COVID restrictions. Exports fell 1.4% year on year to a four-month low of AUD 57.84 billion, while imports increased 1.0% to AUD 45.60 billion. The trade surplus increased to AUD 139.50 billion in 2022, up from AUD 118.72 billion in 2021. Australia has had monthly trade surpluses for four and a half years, boosted by strong sales of iron ore and natural gas.
Source: Australian Bureau of Statistics
RBA Boosts Cash Rate to 3.35% in February, Ninth Hike Since May 2022:
At its February meeting, the Reserve Bank of Australia lifted the cash rate by 25 basis points to 3.35%, confirming market expectations. The rate boost on Tuesday was the ninth since May of last year, bringing borrowing prices to levels last seen in September 2012. The 325bps rise was also the most significant yearly tightening since 1989. While eliminating the earlier forecast of an unpredictable path, the board reaffirmed that more rises were necessary since inflation in Australia remained too high. The central bank’s goal is to bring inflation to the 2-3% area, with the reading expected to be 4-3/4% this year and around 3% by mid-2025. Policymakers stated that they will maintain the economy on a steady course since the path to a gentle landing is restricted. After increasing significantly in 2022, the committee expects Australia’s GDP to average approximately 1-1/2% in 2023 and 2024. In addition, the RBA hiked the interest rate on Exchange Settlement balances by 25 basis points to 3.25%. Policymakers stated that they will maintain the economy on a steady course since the path to a gentle landing is restricted. After increasing significantly in 2022, the committee expects Australia’s GDP to average approximately 1-1/2% in 2023 and 2024. In addition, the RBA hiked the interest rate on Exchange Settlement balances by 25 basis points to 3.25%.
Source: Reserve Bank of Australia
United Kingdom (GDP) Highlights:
UK Economy Shrinks 0.5% in December 2022, First Decline in Three Months:
The British economy shrank 0.5% month on month in December 2022, the first drop in three months and worse than market expectations of a 0.3% drop. Human health activities, education, arts, leisure, and recreation activities, and transportation and storage all declined by 0.8%. Consumer-facing service output declined by 1.2%. Production, on the other hand, increased by 0.3%, thanks to an increased supply of power, gas, steam, and air conditioning. The construction industry, on the other hand, was flat. “In December public services were hurt by fewer operations and GP visits, partially due to the impact of strikes, as well as substantially decreased school attendance. Meanwhile, the World Cup break in Premier League football and postal strikes slowed things considerably. However, these declines were “somewhat offset by a successful month for attorneys, increase in automobile sales, and the cold snap enhancing energy generation,” according to Darren Morgan, ONS head of economic statistics.
Source: Office for National Statistics
China (CNY) Highlights:
China’s Annual Inflation Rate Hits 2.1% in January Amid Lunar New Year and Easing Pandemic Measures:
The annual inflation rate in China increased to 2.1% in January 2023 from 1.8% in December, above market expectations of 2.2%. This was the highest figure in three months, as food costs increased and non-food prices increased further as a result of the Lunar New Year festivities and the removal of pandemic precautions. Food inflation surged to a three-month high (6.2% vs. 4.8% in December), aided by a significant rise in fresh vegetable costs. Meanwhile, non-food inflation increased to 1.2% from 1.1%, with prices rising for apparel (0.6% vs 0.5%), health (0.8% vs 0.6%), transportation (2.0% vs 2.8%), and education (2.4% vs 1.4%), but housing costs declined (-0.1% vs -0.2%). Core consumer prices, which exclude volatile food and energy costs, are up 1.0% year on year, following a 0.7% increase in December. Consumer prices rose 0.8% month on month in January, contrary to the expectation of 0.7%, following a flat reading in December and marking the largest rise since January 2021.
Source: Federal Reserve
The information and opinions in this report are for general information use only. This report is subject to change without prior notice. The individual investing goals and financial status of any particular recipient have not been taken into consideration in the preparation of this report. While the material in this article was gathered from sources that the author considered to be dependable, the author neither guarantees nor accepts responsibility for any direct, indirect, or consequential losses that may arise from the use of any such information or opinions.