Week 7 | February 13 – 19, 2023
Mr. Van Loven A. Abbu, LPT
SUMMARY
United States (USD) Highlights:
US inflation rate shows only a slight slowdown in January 2023:
The annual inflation rate in the United States fell just a little in January 2023, to 6.4% from 6.5% in December, falling short of market expectations of 6.2%. However, it is the lowest reading since October 2021. Food prices slowed (10.1% vs 10.4%), but used vehicle and truck prices continued to fall (-11.6% vs -8.8%). In contrast, the cost of housing (7.9% vs 7.5%) and energy (8.7% vs 7.3%) climbed quicker, with gasoline prices jumping 1.5%, reversing a 1.5% fall in December. Yet, both fuel oil (27.7% vs 41.5%) and electricity costs (11.9% vs 14.3%) fell. Although inflation appears to have peaked at 9.1% in June of last year, it remains more than three times the Fed’s 2% objective and points to a broad-based increase in general prices, notably in services and housing. The CPI climbed 0.5% in December, the highest in three months, owing mostly to increasing prices for housing, food, gasoline, and natural gas..
Source: U.S. Bureau of Labor Statistics
The Core Consumer Price Inflation rate in the US drops to 5.6% in January, but remains above Fed’s target:
The core consumer price inflation rate in the United States, which excludes volatile commodities such as food and energy, fell for the fourth consecutive month in January 2023 to 5.6 percent year on year, the lowest level since December 2021. Still, the rate was higher than market predictions of 5.5 percent and remained far higher than the US Federal Reserve’s objective.
Source: U.S. Bureau of Labor Statistics
Consumer Spending Strengthens as US Retail Sales Rebound in January:
Retail sales in the United States surprisingly increased by 3% month over month in January 2023, the largest gain since March 2021 and much beyond market expectations of a 1.8% increase. It comes after a 1.1% dip in December. Sales at department shops (17.5%), food services and drinking establishments (7.2%), motor vehicles and parts (5.9%), furniture stores (4.4%), electronics and appliances (3.5%), miscellaneous stores (2.8%), and apparel (2.5%) increased the most. Gasoline station sales, on the other hand, remained flat. Sales grew 2.3% excluding vehicles and 2.6% without gas and autos. Core retail sales, which exclude autos, fuel, building materials, and food services and are more closely related to the consumer expenditure component of GDP, increased by 1.7%. Consumer spending remained healthy following a dip last year, despite a strong labor market, wage growth, and signs of lessening inflationary pressures, according to the statistics. Inflation is not factored into retail purchases.
Source: U.S. Census Bureau
United Kingdom (GBP) Highlights:
UK unemployment rate holds steady at 3.7% amid record flow into work:
In the three months to December 2022, the UK unemployment rate remained constant at 3.7%, the same as in the preceding quarter and in accordance with predictions. Those aged 16 to 24 years old drove the growth in the number of persons jobless for up to six months. In addition, the three-year average of economic inactivity declined to 21.4%. According to the ONS, there was a record-high net flow out of economic inactivity from October to December as individuals returned to work. The number of persons working in the UK increased by 74K in the three months to December, above expectations of a 40K increase and after a 27K increase the previous month. Furthermore, from November 2022 to January 2023, employment openings declined by 76K to 1,134K, marking the seventh consecutive quarterly decline, highlighting uncertainty across industries, as survey respondents continue to cite economic conditions as a factor in delaying recruitment.
Source: Office for National Statistics
UK Employment Surges Past Expectations with 74,000 Job Increase in December:
The number of persons working in the UK increased by 74 thousand in the three months to December 2022, above market estimates of a 40 thousand increase and after a 27 thousand increase in the previous month. Part-time employment increased to its highest level since the September-November 2021 period, while full-time employment declined but remained above pre-pandemic levels. Part-time self-employment grew but full-time self-employment remained low.
Source: Office for National Statistics
UK Inflation Falls to Lowest in Four Months in January:
Annual inflation in the United Kingdom decreased to 10.1% in January 2023 from 10.5% in December, falling short of market expectations of 10.3%. Inflation declined for the third month in a row, reaching the lowest level since September of last year. Transportation (3.1% vs. 6.5%), notably passenger transportation and motor fuels, made the greatest negative impact, followed by restaurants and motels (10.8% vs. 11.3%). Food and non-alcoholic drinks (16.7% vs 16.8%), apparel and footwear (6.2% vs 6.5%), and furniture (9.2% vs 9.8%) all climbed at a slower rate, in accordance with the usual New Year discounts. In contrast, housing and utility inflation increased (26.7% vs. 26.6%), entertainment and culture (5% vs. 4.9%), health (6.3% vs. 5.1%), and alcoholic drinks and cigarettes (5.1% vs. 3.7%). The CPI declined 0.6% from the previous month, the first drop in a year and the largest since January 2019. Fuels (-3.8%) and air transportation (-41.7%) saw significant reductions.
Source: Office for National Statistics
Australia (AUD) Highlights:
Australian consumer sentiment hits three-month low amid rising living costs and interest rate hikes:
The Westpac-Melbourne Institute Index of Consumer Sentiment for Australia plummeted 6.9% to 78.5 in February 2023, the lowest level in three months, as cost-of-living pressures and interest rate hikes continued to weigh severely. The index has also neared a historic low of 78, set in November. The latest drop in mood followed the release of ABS numbers the previous month, which showed consumer price inflation jumped from 7.3% in September to 7.8% in December, bringing Australia’s inflation to a 32-year high and placing it on pace with the skyrocketing rates of other industrialized countries. Interest rates were also putting pressure on confidence, with the RBA increasing the official cash rate by 0.25 percentage points at its February meeting. Given how well expected the move was, the negative reaction was most likely driven by the RBA Governor’s unambiguous suggestion of prolonged rises.
Source: Westpac Banking Corporation, Melbourne Institute
Australian Business Conditions Improve as NAB Business Confidence Index Rises in January 2023:
The NAB business confidence index in Australia increased 6 points to 6 in January 2023, reaching its long-run average. The transportation and utilities and wholesale industries led the charge, while others remained relatively stable. Business conditions improved after three months of deterioration (18 versus 13 in December), aided by increases in sales (28 vs 20), profitability (17 vs 13), and employment (10 vs 9). Mining and wholesaling, construction, and manufacturing all saw significant increases. Also, leading indications rose, with forward orders rising (6 vs 3). Nevertheless, capacity utilization reached 85.7% in mid-2022, a record high. After a brief respite in late 2022, price and cost rises resumed. “Overall, the poll implies that the economy remained resilient as the year began, despite challenges from inflation and increased interest rates,” said NAB chief economist Alan Oster.
Source: National Australia Bank
Jobless rate hits 8-month high in Australia as employment falls for a second straight month:
Australia’s seasonally adjusted unemployment rate unexpectedly rose to 3.7% in January 2023, up from a nearly five-decade low of 3.5% in December and beyond market expectations of 3.5%. This was the highest unemployment rate since May of last year, with the number of unemployed rising by 21,900 to 523,200. Individuals searching for full-time work increased by 17,000 to 344,000, while those looking for part-time work increased by 4,900 to 179.200. At the same time, employment fell by 11,500 to 13.72 million, the second consecutive month of loss, falling short of forecasted gains of 20,000. Full-time employment fell by 43,300 to 9,567,800, while part-time employment increased by 31,800 to 4,154,100. The participation percentage fell to 66.5% in January, down from 66.6% in December. The underemployment rate remained constant at 6.1%, but underutilization increased to 9.8% from 9.6%. The total number of monthly hours worked in all jobs fell by 40 million, or 2.1%, to 1,836 million.
Source: Australian Bureau of Statistics
Second consecutive monthly decline in Australian employment, with full-time jobs taking the biggest hit:
Australia’s employment unexpectedly fell by 11,500 to 13.72 million in January 2023, falling short of market expectations of a 20,000 increase and following a revised 19,900 drop the previous month. The most recent estimate indicated the second consecutive month of employment decline following an extremely high increase in 2022. Part-time employment increased by 31,800 to 4,154,100, while full-time employment decreased by 43,300 to 9,567,800. Employment increased by 394,100, or 3.0 percent, in the year to January.
Source: Australian Bureau of Statistics
Japan (JPY) Highlights:
Japan’s economy rebounds in Q4 2022 after COVID border controls lifted:
According to preliminary statistics, the Japanese economy increased by 0.2% year on year in Q4 2022, reversing a revised 0.3% decline in Q3 but falling short of market estimates of a 0.5% increase. Private consumption increased after tough border controls were lifted, despite headwinds from rising living costs (0.5% vs flat in Q3), government spending increased (0.3% vs 0.1%), and net trade contributed positively, with exports increasing for the fifth consecutive quarter (1.4% vs 2.5%) and imports declining for the first time since Q3 of 2021 (-0.4% vs 5.5%). Nevertheless, after increasing in the previous two quarters, company investment dropped (-0.1% versus 0.3%). The economy grew by 1.1% year on year, down from 2.1% in 2021 as the country recovered from the COVID epidemic.
Source: Cabinet Office, Japan
Concerns rise over Japan’s economic recovery as trade deficit stretches to 18 months:
Japan’s trade deficit increased to a record high of JPY 3,496.6 billion in January 2023, up from JPY 2,199.4 billion the previous month, compared to a market expectation of JPY 3,871.5 billion. This was the 18th consecutive month of a trade deficit, the longest run since 2015, increasing worries about the country’s economic recovery. Imports increased 17.8% year on year to JPY 10,047.8 billion, the 21st consecutive month of double-digit growth but the slowest pace since April 2021; exports increased at a much slower 3.5%, the 23rd consecutive month of growth but the slowest pace since a fall in February 2021, to JPY 6,551.2 billion. Japan’s trade deficit in 2022 was JPY 19,971.3 billion, the second consecutive annual loss and the worst since 1979, owing to a spike in imports amid rising commodity prices and currency weakness.
Source: Ministry of Finance, Japan
Switzerland (CHF) Highlights:
Swiss inflation rate beats expectations, reaches 3.3% YoY in January 2023:
Switzerland’s annual inflation rate increased to 3.3% year on year in January 2023, the highest level since September 2022, up from 2.8% the previous month and above market estimates of 2.9%. The cost climbed further for food & non-alcoholic drinks (5.6% vs 4.0%) alcoholic beverages & tobacco (2.2% vs 1.7%), clothes &footwear (3.5% vs 2.2%), housing & energy (5.1% vs 4.2%) and leisure & culture (1.9% vs 1.8%). Household maintenance (5.2% vs 5.7%), transportation (4.7% vs 5.3%), and restaurants & hotels (2.6% vs 2.7%), on the other hand, slowed, while health (-0.4%) and education (0.3%) inflation remained stable. Consumer prices rose 0.6% month on month in January, following a 0.2% dip in December and falling short of market expectations of 0.4%. Meanwhile, Consumer Price Index CPI climbed to 105 points in January from 104.41 points in December 2022.
Source: Swiss Federal Statistical Office
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