Week 8 | February 20 – 26, 2023
Mr. Van Loven A. Abbu, LPT
SUMMARY
United States (USD) Highlights:
US Unemployment Claims Fall Below Expectations, Pointing to Tight Labor Market:
On the week ending February 18th, the number of Americans filing for unemployment benefits declined by 3,000 to 192,000, falling short of market forecasts of 200,000. The most recent figure stayed close to the nine-month low of 183,000 set at the end of January, indicating that the US job market remains tight, owing in part to low labor force participation. This might compel firms to boost pay in order to attract and retain employees, adding to inflationary pressures in the world’s largest economy. The four-week moving average, which accounts for week-to-week volatility, increased by 1,500 points to 191,250. Non-seasonally adjusted monthly claims declined 14,465 to 210,867, with large drops in California (-4,276) and New York (-1,938).
Source: U.S. Department of Labor
January core PCE price increase signals continued inflation pressures for US economy:
Core PCE prices in the US, which do not include food and energy, increased by 0.6% month over month in January 2023, the highest level since August. This was in addition to the previous month’s upwardly revised 0.4% increase and was higher than market expectations of 0.4%. The Federal Reserve’s chosen measure of inflation, the annual rate, increased by 4.7%, above market forecasts of 4.3%, supporting indications from Fed officials that interest rates must be raised for a longer period of time to restrain uncontrollable price increases. The annual rate increased from 5.3% to 5.4%, while the headline number increased by 0.6% from the previous month, the highest since June.
Source: U.S. Bureau of Economic Analysis
University of Michigan revises US consumer sentiment higher for February:
The preliminary reading of 66.4 for the University of Michigan’s consumer mood index for the US was increased to 67 in February 2023, the highest reading since January 2022. The present circumstances subindex was downgraded to 70.7 from 72.6 while the expectations gauge was raised to 64.7 from 62.3. The 5-year projection remained the same at 2.9%, while inflation expectations for the year were reduced from 4.2% in the preliminary estimate to 4.1%.
Source: University of Michigan
Canada (CAD) Highlights:
Canada’s Inflation Rate Moderates to 5.9% in January Amid Base-Year Effects:
The annual inflation rate in Canada decreased to 5.9% in January 2023, the lowest since February 2022 and lower than market estimates of 6.1%, dropping from 6.3% the previous month due to base-year impacts. Transportation price increase slowed substantially (5.4% versus 6% in December), owing to reduced inflation for passenger vehicles and a small slowing in fuel costs. CPI for shelter also slowed (6.6% versus 7%), as lower costs for housing and homeowner replacement offset higher mortgage rates owing to the BoC’s tightening. Food costs, on the other hand, increased at the quickest rate since 1981 (10.4% vs. 10.1%), with prices increasing in both grocery shops and restaurants. The CPI climbed 0.5% month on month, following a 0.6% dip the prior month.
Source: Statistics Canada
Canadian retail sales rebound in January, up by 0.7% MoM:
According to preliminary projections, retail sales in Canada will likely increase 0.7% month over month in January 2023. In December 2022, retail sales increased by 0.5% from the previous month, following a revised flat figure in November and meeting original predictions. Sales climbed in seven of eleven subsectors, accounting for 75.1% of retail commerce. Increased sales at auto and parts dealers (+3.8%) and general retail stores (+1.7%) offset a 5.8% dip at gas stations. In December, retail sales grew in four provinces, with Ontario (+0.9%) leading the way. Retail commerce increased by 7.3% year on year in December, the largest in five months, following a 5.2% increase the previous month. In 2022, retail activity in Canada will expand by 8.2%, led by petrol stations and general merchandise stores.
Source: Statistics Canada
New Zealand (NZD) Highlights:
Strong demand for imported goods pushes New Zealand trade deficit higher:
In January 2023, New Zealand had a trade deficit of NZD 1.954 billion, following a deficit of NZD 1.106 billion in January 2022. Milk powder, butter, and cheese (up 25% to NZD 2.0 billion); cereals, wheat, starch, and milk preparations (up NZD 186 million or 34%); casein and caseinates (up 27% to NZD174 million); wine (up 31% to NZD 151 million); and logs, wood, and wood products (up 14% to NZD 276 million). However, non-crude petroleum products (+173% to $1.7 billion); ships, boats, and floating structures (up 708% to NZD 128 million); and electrical machinery and equipment (up 21% to NZD 622 million) boosted goods imports by 26% year on year to NZD 7.4 billion.
Source: Statistics New Zealand
RBNZ Delivers 10th Straight Rate Hike, Sees Rates Peaking at 5.5% in 2023:
The Reserve Bank of New Zealand raised the official cash rate by 50 basis points to 4.75% during its first meeting of the year, the highest since January 2009 and in line with market expectations. Wednesday’s increase was the tenth in a row, bringing the total to 450bps since October 2021, the most severe tightening since 1999. The board emphasized that both consumer inflation and core inflation were excessive, inflation expectations were unfavorable, and employment was beyond its sustainable level. The group predicted that interest rates will rise further, reaching 5.5% this year. Yet, the central bank predicted that the GDP will contract in the second quarter of 2023. In response to Cyclone Gabrielle, the RBNZ forecasted rising prices and production interruptions in the short term. Nonetheless, construction projects will increase activity in the next years. Monetary policy’s best contribution is to free up resources elsewhere by restraining demand through higher interest rates.
Source: Reserve Bank of New Zealand
Eurozone (EUR) Highlights:
German Business Confidence Reaches 8-Month High in February:
The Ifo Business Climate indicator for Germany rose to an eight-month high of 91.1 in February 2023, up from a downwardly revised 90.1 in January and estimates of 91.2. Predictions for the next six months were much less negative (88.5 vs 86.4), although companies’ views of their current condition deteriorated somewhat (93.9 vs 94.1). Meanwhile, 45.4% of businesses reported supply chain constraints, down from 48.4% in January, and the proportion of those planning to raise prices has decreased. Across sectors, the business mood in tourism and hospitality has significantly improved, but export expectations in the industry have marginally decreased. According to Ifo economist Klaus Wohlrabe, the German economy will not avoid a recession, but it will be a mild one.
Source: Ifo Institute
Asdasdasd: Inflation Rate – 06:00 PM
Consumer price inflation in the Eurozone was revised slightly higher to 8.6 percent year on year in January 2023, up from 8.5 percent before, and significantly over the European Central Bank’s objective of 2.0 percent. Still, the rate fell to its lowest level since May of last year, owing to a reduction in energy inflation (18.9 percent vs 25.5 percent in December). On the other hand, prices for non-energy industrial items climbed at a quicker rate (6.7 percent versus 6.4 percent) as did food, alcohol, and tobacco (14.1 percent vs 13.8 percent), but services inflation remained steady at 4.4 percent. In January, the core rate, which excludes volatile goods like as energy and food, reached a new high of 5.3 percent. Consumer prices declined 0.2 percent month on month, marking the third consecutive month of fall. Meanwhile the Eurozone Consumer Price Index fell 0.2% to 120.27 points in January 2023, down from 120.52 points in December 2022.
Source: EUROSTAT
Japan (JPY) Highlights:
Japan’s Inflation Rate Hits 40-Year High in January 2023:
Japan’s annual inflation rate increased to 4.3% in January 2023, up from 4.0% the previous month. This was the highest reading since December 1981, as imported raw commodity prices rose and the yen fell. Upward price pressures came from all components, namely food (7.3% vs 7.0% in December); housing (1.3% vs 1.2%); fuel, light, and water charges (14.9% vs 15.2%), mainly electricity (20.2% vs 21.3%) and gas (24.3% vs 23.3%); transport & communication (2.1% vs 2.1%); medical care (0.5% vs 0.4%), furniture & household utensils (7.7% vs 7.5%); clothes (3.1% vs 2.9%), education (0.7% vs 0.7%), and miscellaneous (1.1% vs 1.1%). Core consumer prices rose by 4.2% year on year, the biggest since September 1981, meeting market expectations but still over the Bank of Japan’s 2% target for the ninth consecutive month. Consumer prices up 0.4% month on month in January, following a 0.3% increase in December.
Source: Ministry of Internal Affairs & Communications
United Kingdom (GBP) Highlights:
Asdasdasd: Gfk Consumer Confidence – 08:01 AM
The GfK Consumer Confidence indicator in the United Kingdom rose to -38 in February 2023 from -45 the previous month, exceeding market expectations of -43 and indicating the strongest result since April 2022. The seven-point gain was the largest monthly improvement in over two years, albeit the most recent reading was far lower than the -7 recorded in February 2020, shortly before the COVID epidemic hit Britain. Households’ evaluation of their personal finances improved over the previous year (-26 vs -31 in January) and for the next 12 months (-18 vs -27). Also, consumers’ perceptions on the country’s economic status were less unfavorable (-65 vs -71) in the future year (-43 vs -54). Nevertheless, their plans to make large purchases grew marginally (-37 vs -40). “But, many obstacles remain, and this might just be a bubble of hope – and bubbles usually break,” said Joe Staton, client strategy director at GfK.
Source: GfK Group
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.