Numerous Inflation and Industrial Production Reports Released This Friday

September 10, 2021

There were also two central bank policy rate announcements, and each involved an interest rate increase:

The Central Reserve Bank of Peru‘s Board of Directors hiked its policy interest rate twice as much as analysts were anticipating to 1.0% from 0.5%. This was the second straight increase after a hike of 25 bps in August, but unlike then, today’s statement admonishes against assuming more moves following immediately: “The current decision does not necessarily imply a cycle of successive increases in the reference rate.” Peruvian inflation of 4.95% in August was the most since early 2009, but officials attribute the spike to temporary factors and project that inflation will settle back into its target range within a year. Core inflation is only 2.4%. When the pandemic hit in 2020, officials implemented two quick 100 basis point rate cuts in March and April but made no further changes in the rate until the aforementioned hike in August.

The Bank of Russia‘s key interest rate was lifted for the fifth time since March. In all, the rate has climbed 250 basis points to 6.75%, but today’s move of 25 basis points matched the previously smallest change, which happened to be the initial increment. With GDP back to its pre-pandemic level and “given high inflation expectations, the balance of risks for inflation is tilted to the upside. This may bring about a more sustained deviation of inflation from the target. The Bank of Russia’s monetary policy stance is aimed to limit this risk and return inflation to 4%.” Today’s statement considers more rate hikes likely.

It’s been a tough week for equities. After an initial rise, the DJIA is currently a bit in the red. Asian markets mostly closed higher, including gains today of 1.3% in Japan and 1.9% in Hong Kong, but European markets show little net movement.

The U.S. dollar is flat against the DXY weighted index but down 0.4-0.5% against the Canadian, Australian and New Zealand dollars. The greenback shows a 0.1% uptick versus the yen and a similarly-sized downtick versus the euro.

Ten-year U.S. treasury and German bund yields are respectively three and one basis  points higher. WTI oil has spiked up 2.5%, but gold is marginally lower.

German CPI inflation has been confirmed at its preliminary estimate. Consumer prices were unchanged on month, their first non-positive monthly change since November, although that didn’t prevent a further 0.1 percentage point acceleration in the 12-month rate of increase to a 332-month high of 3.9%. Core inflation was only 2.8%, however.

Norwegian CPI inflation rose to a 32-month high of 3.4% in August despite also being unchanged in month-on-month terms. Norway also reported a spike in producer price inflation to 50.1% last month from 43.4% in July. The last single digit pace of 9.7% was experienced in February.

Portuguese CPI inflation in August remained at July’s 3-year high of 1.5%.

Czech CPI inflation increased 0.7 percentage points to a 153-month high of 4.1% in August.

Danish consumer prices dipped 0.2% in August but accelerated to a 104-month on-year high of 1.8%.

A 0.7% monthly rise in U.S. producer prices last month was a tad more than forecast and resulted in a 129-month high PPI inflation rate of 8.3%. The 12-month increase in core PPI was 6.3%.

British industrial production jumped 1.2% in July, triple the expected advance but continuing a see-saw pattern after a drop of 0.7% in June, a rise of 0.6% in May, a drop of 0.9% in April and a 1.5% advance in March. A 12-month increase of 3.8% was the smallest since March. Construction output fell 1.6% on month and rose by the smallest on-year rate (8.6%) since March.

Mexican industrial production rose 1.1% on month and 7.3% on year in July, down from a 12-month 36.4% in April-May.

Belgian industrial production advanced 5.1% on month and 26.5% on year, closed to April’s on-year high.

French industrial production rose 0.3% in July, half as much as in June. The 12-month rate of increase has slowed to 4.0%, least in a sequence of five rises and down from 44% in April.

Spanish industrial production fell on month by 1.1% in both June and July, trimming the 12-month increase to 3.4% from 24.8% in May and 48.5% in April.

Italian industrial production rose 0.8% in July. Year-on-year industrial production growth has slowed to 7.0% from 79.0% in April.

Irish industrial production rose 7.7% following back-to-back drops of 4.5% in May and 4.1% in June. Output was 15.6% than in the same month a year earlier.

Malaysian industrial production fell 5.2% on year in July, its first negative on-year change since November. Malaysian retail sales, by contrast, was up 7.1% on year, most in 14 months.

Greek industrial production fell 1.0% on month but was 8.9% higher than a year earlier. Austrian industrial production slipped 0.3% on month and was 9.7% above its year-earlier level.

Indian industrial production climbed 7.2% and 14.5% on year in July.

Brazilian retail sales grew 1.2% on month and 5.7% on year in July.

Canadian unemployment dropped 0.4 percentage points to an 18-month low of 7.1% in August. Employment increased 90.2k last month, a tad less than forecast, and labor participation slowed 0.1 percentage point to 65.1%. On-year growth in average hourly wages doubled to 1.25%.

Britain’s merchandise trade deficit widened 6.1% to GBP 12.7 billion. The goods and services deficit (GBP 3.1 billion) was its largest since December.

Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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