Sun, Dec 04, 2022 @ 09:50 GMT

France household consumption dropped sharply by -2.8% yoy in Oct

    France household consumption dropped sharply by -2.8% mom in October, much worse than expectation of -0.9% mom. That’s also the largest decline since April 2021, primarily due to the sharp drop in energy consumption (-7.9%), but also stems from the decline in purchases of manufactured goods (-1.7%) and in food consumption (-1.4%).

    All item CPI was unchanged at 6.2% yoy in November. Food price accelerated from1 2.0% yoy to 12.2% yoy. Energy prices slowed from 19.1% yoy to 18.5% yoy. Manufacturing products rose from 4.2 yoy to 4.4% yoy while services dropped from 3.1% yoy to 3.0% yoy.

    Q3 GDP grew 0.2% qoq, unrevised.

    China PMI manufacturing dropped to 48.0, non-manufacturing down to 46.7

      China NBS PMI Manufacturing dropped from 49.2 to 48.0 in November, below expectation of 49.2. PMI Non-Manufacturing dropped from 48.7 to 46.7, below expectation of 48.0. Both readings were the lowest in seven months.

      “In November, impacted by multiple factors including the wide and frequent spread of domestic outbreaks, and the international environment becoming more complex and severe, China’s purchasing managers’ index fell,” NBS senior statistician Zhao Qinghe said in a statement.

      Zhao said domestic outbreaks in November caused “production activity to slow down and product orders to fall”, noting “increased fluctuation in market expectations”.

      Australia monthly CPI slowed to 6.9% yoy in Oct, food inflation eased

        Australia monthly CPI slowed from 7.3% yoy to 6.9% yoy in October. The most significant contributors to the annual rise were new dwellings (+20.4%), automotive fuel (+11.8%) and fruit and vegetables (+9.4%).

        “High levels of building construction activity and ongoing shortages of labour and materials contributed to the rise in new dwellings” Michelle Marquardt, ABS Head of Prices Statistics said.

        Automotive fuel prices accelerated from 10.1% to 11.8% as the government’s temporary cut to the fuel excise ended on September 29. Annually, prices for fruit and vegetables rose by 9.4%, down from 17.4% in September.

        Full release here.

        NZ ANZ business confidence dropped to -57.1, strain showing for businesses

          New Zealand ANZ Business Confidence dropped from -42.7 to -57.1 in November. Looking at some details, own activity outlook dropped from -2.5 to -13.7, just 8 pts shy of 2009 lows. Export intentions dropped from -4.3 to -5.4. Investment intentions dropped from 1.1 to -8.1. Employment intentions dropped from 5.0 to -4.0. Pricing intentions dropped from 64.5 to 58.5. Cost expectations ticked up from 88.6 to 88.7. Inflation expectations rose from 6.13 to 6.39.

          ANZ said, “The strain is showing for kiwi businesses. Cost increases remain relentless and margins are squeezed, firms are chronically understaffed, and they’re waiting for the hammer to fall as the impact of relentless monetary policy tightening eventually kicks in. There are a lot of dark clouds on the horizon, and this month’s survey reflects that.”

          Full release here.

          Japan industrial production dropped -2.6% mom in Oct, but bounce back expected

            Japan industrial production dropped -2.6% mom in October, worse than expectation of -1.8% mom.

            The seasonally adjusted production index for the manufacturing and mining sectors stood at 95.9 against 100 for the base year of 2015. The shipment index stood at 94.1, down -1.1%, and the inventory index at 103.0, down -0.8%.

            The Ministry of Trade, Economy and Industry expects production to rise 3.3% in November and then 2.4% in December.

            METI cut its assessment of industrial output for the first time in five months, saying “production is gradually picking up, but some weaknesses are observed.”

            US consumer confidence dropped to 100.2, most likely prompted by recent rise in gas prices

              US Conference Board Consumer Confidence dropped from 102.2 to 100.2 in November, slightly above 100.0. Present Situation Index dropped from 138.7 to 137.4. Expectations index dropped from 77.9 to 75.4.

              “Consumer confidence declined again in November, most likely prompted by the recent rise in gas prices,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The Present Situation Index moderated further and continues to suggest the economy has lost momentum as the year winds down. Consumers’ expectations regarding the short-term outlook remained gloomy. Indeed, the Expectations Index is below a reading of 80, which suggests the likelihood of a recession remains elevated.”

              “Inflation expectations increased to their highest level since July, with both gas and food prices as the main culprits. Intentions to purchase homes, automobiles, and big-ticket appliances all cooled. The combination of inflation and interest rate hikes will continue to pose challenges to confidence and economic growth into early 2023.”

              Full release here.

              BoE Mann: Medium-term inflation expectation important for next rate vote

                BoE MPC member Catherine Mann said at an online event, “looking at medium-term expectations is a very important ingredient to my assessment of what the appropriate Bank Rate at the next vote might be.”

                “Once inflation expectations have been managed, the bank rate can come off a future peak,” she added. At the same time, foreign exchange rate is also an “important ingredient” for inflation in the UK.

                Canada GDP grew 0.1% mom in Sep, to be unchanged in Oct

                  Canada GDP rose 0.1% mom in September, below expectation of 0.2% mom. Goods-producing industries grew 0.3% while services-producing industries were essentially unchanged.

                  Advance information indicates that real GDP was unchanged in October. Increases in the public, transportation and warehousing, construction and wholesale trade sectors were offset by decreases in the manufacturing and mining, quarrying and oil and gas extraction sectors.

                  Full release here.

                  Eurozone economic sentiment rose to 93.7 in Nov, first increase since Feb

                    Eurozone Economic Sentiment Indicator rose from 92.7 to 93.7 in November, the first increase since February. Industrial confidence dropped from -1.2 to -2.0. Services confidence rose from 2.1 to 2.3. Consumer confidence rose from -27.5 to -23.9. Retail trade confidence was unchanged at -6.7. Construction confidence dropped from 2.6 to 2.3. Employment Expectation Indicator rose from 105.4 to 107.4. Economic Uncertainty Indicator dropped from 30.7 to 28.4.

                    EU ESI rose from 91.2 to 92.2. Amongst the largest EU economies, the ESI increased strongly in Italy (+4.1) and, to a lesser extent, the Netherlands (+1.2) and Germany (+1.1), while it eased in Spain (-1.7) and France (-1.6). Sentiment in Poland stayed broadly flat (+0.3). EEI rose from 104.9 to 106.3. EUI dropped from 29.8 to 27.8.

                    Full release here.

                    Swiss GDP grew 0.2% qoq in Q3

                      Swiss GDP grew 0.2% qoq in Q3, matched expectations. Looking at some details, manufacturing contracted -0.2%. Construction dropped -2.2%. Finance and insurance dropped -2.1%. But trade expanded 2.3% while accommodation and food rose 2.8%.

                      By expenditure approach, private consumption grew 0.7%. Equipment and software investment rose 2.1%. Exports excluding valuables rose 7.89%. But construction investment dropped -2.0%.

                      Full release here.

                      NZIER: RBNZ rate to peak at 5% next year

                        In the November Monetary Policy Statement, RBNZ projected that interest rate would peak at 5.5% while the economy would start contracting in Q2 2023 until Q1 2024.

                        NZIER said it expected the negative impact of higher interest rates on demand will “become more apparent around mid-2023”. With that, RBNZ “will not need to increase interest rates by as much as it currently expects to”.

                        “Nonetheless, we expect further increases in the OCR and for it to peak at 5 percent over the coming year,” NZIER added.

                        Full NZIER statement here.

                        Fed Barkin supportive of slower, but probably longer and potentially high tightening

                          Richmond Fed President Thomas Barkin said in an interview yesterday, “I’m very supportive of a (tightening) path that is slower, probably longer and potentially higher than where we were before.”

                          “It is helpful to be somewhat more cautious as you are in restrictive territory,” he said. “It is a better risk-management approach.”

                          “Inflation has been stubborner than I would like,” he said. “As long as inflation stays elevated, that makes the case to me that we need to do more.”

                          Fed Williams: Restrictive policy to continue through at least next year

                            New York Fed President John Williams said yesterday, “Inflation is far too high, and persistently high inflation undermines the ability of our economy to perform at its full potential… There is still more work to do.”

                            “I do think we’re going to need to keep restrictive policy in place for some time; I would expect that to continue through at least next year,” he added.

                            Nevertheless, “at some point, nominal interest rates will need to come down. Otherwise real interest rates will be going up and that would just be tightening policy further and further in terms of its effects on the economy… I do see a point, probably in 2024, that we’ll start bringing down nominal interest rates because inflation is coming down and we would want to have real interest rates appropriately positioned.”

                            ECB Lagarde: Interest rates remain the main tool for fighting inflation

                              ECB President Christine Lagarde told a parliamentary committee, interest rates will remain the “main tool for fighting inflation”. Meanwhile, in December, ECB will “lay out the key principles for reducing the bond holdings”. The balance sheet will be “normalized over time in a measured and predictable way.”

                              “While monetary policy is geared towards bringing inflation back to our medium-term target, the economic outlook will also depend on the actions taken by other stakeholders,” she said. “In the current environment of high inflation, fiscal policy needs to be considerate to not add to inflationary pressures. Fiscal support should therefore be targeted, tailored and temporary.

                              Lagarde also reiterated that “meeting-by meeting approach” and data dependence of upcoming policy decisions. “How much further we need to go, and how fast we need to get there, will be based on our updated outlook, the persistence of the shocks, the reaction of wages and inflation expectations, and on our assessment of the transmission of our policy stance,” she added.

                              Full remarks here.

                              ECB Knot: Risk of doing too little clearly more pronounced

                                ECB Governing Council member Klaas Knot said, “My worry is still inflation, inflation, inflation… As long as the risks to our inflation outlook are so clearly tilted to the upside, I think the risk of us doing too little is clearly more pronounced than us doing too much… We should not give up too early and not cry victory too early.”

                                Knot also said a recession is “not a foregone conclusion”. “If you look at Germany, where actually the economy is doing better than then was feared, it’s not a foregone conclusion that we will get a recession”, he said. “We will get weaker growth, that’s for sure. But we also need weaker growth to bring inflation back to target.”

                                RBNZ Silk: The persistence factor of inflation was most surprising

                                  RBNZ Assistant Governor Karen Silk said in an interview, “What we have seen is actual inflation continue to surprise on the upside, but more importantly inflation expectations have moved higher as well… And it’s the persistence factor that has probably been the most surprising.”

                                  On tightening, “obviously we started way earlier than other central banks, so other central banks had to move an awful lot faster basically to play catch up,” she said. “So no, I don’t believe that the MPC has dilly-dallied around on this at all.”

                                  “If the information shows that we’ve reached that peak (5.5% interest rate) and we see that turn and we’re starting to see real impacts on inflation and inflation expectations, then that does offer us the opportunity to revisit,” she said.

                                  RBA Lowe: Best outcome is for wages to pick up but not too much further

                                    RBA Governor Philip Lowe told a parliamentary committee that the central bank is keeping an eye on electricity prices and housing. “If we can address those two issues then that will make a substantial contribution in bringing inflation back down over the next couple of years,” he said.

                                    Also, he added that a massive spike in wages would make it harder to bring inflation down. “If wage growth was 7 or 8 per cent then inflation would be 6 or 7 per cent … we were in this world in the 1970s and it worked out very badly,” Lowe said. “The best outcome for the country is for wages to pick up but to not go too much further.”

                                    Australia retail sales fell -0.2% mom in Oct, first decline this year

                                      Australia retail sales turnover dropped -0.2% mom to AUD 35.02B in October, much worse than expectation of 0.5% mom rise. That’s also the first monthly decline in 2022.

                                      Ben Dorber, ABS head of retail statistics said: “The October fall in retail turnover ends a run of nine straight monthly rises and suggests increased cost of living pressures including interest rate rises have started to weigh on consumer spending.”

                                      “Turnover fell in all industries in October except for food retailing, which rose 0.4 per cent boosted by flood-related spending in parts of Australia and continued high food prices.”

                                      Full release here.

                                      China PBoC cuts RRR, USD/CNH range bound

                                        China’s central bank PBoC announced to lower the reserve requirement ratio (RRR) by 0.25%, effect December 5. That’s the second cut this year, last being in April. The move is expected to released around CNY 500B in long-term liquidity to support the economy.

                                        PBoC sad in a statement the the cut is aimed at “keeping liquidity reasonably ample” and “increasing the support for the real economy.” It will also help banks support industries troubled by the pandemic.

                                        USD/CNH is staying in tight range after the announcement. Current development suggests that correction from 7.3745 might have completed at 7.0191 already, ahead of 7.0000 psychological level. Sustained break of 7.1714 support turned resistance will affirm this case, and bring stronger rise back to retest 7.3745 high.

                                        Germany Gfk consumer sentiment rose slightly to -40.2, but situation remains tense

                                          Germany Gfk Consumer Sentiment for December rose slightly from -41.9 to -40.2, better than expectation of -45.3. In November, economic expectations rose from -22.2 to -17.9. Income expectations rose from -60.5 to -54.3. Propensity to buy dropped from -17.5 to -18.6.

                                          “Consumers’ long-standing fear of skyrocketing energy prices has currently eased somewhat, which is having a slightly positive impact on consumer sentiment. On the one hand, some energy prices have recently recovered a bit, and on the other hand, consumers apparently assume that the measures adopted to cap energy prices can help curb inflation, even if this may turn out to be rather modest,” explains Rolf Bürkl, GfK consumer expert. “Despite the slight improvements, however, the situation remains tense.”

                                          Full release here.