Much U.S. Data, An Unclear Truce Between Israel & Hamas, ECB Minutes and Much More
January 16, 2025
U.S. data reported this Thursday revealed
- The biggest weekly total of new jobless insurance claims (217k) in three weeks but their lowest 4-week average in 42 weeks. A healthy labor market, all in all.
- A 0.4% rise in retail sales last month, somewhat less than forecast but following an upwardly revised 0.8% advance in November. Holiday shopping was good, and the 3.9% 12-month rise of retail sales was the most in a year.
- Import prices went up only 0.1% in each month of the fourth quarter despite back-to-back jumps of 0.9% in November and 1.4% last month in the fuel component. Compared to December 2023 levels, import prices and export prices advanced by 2.2% and 1.8%.
- The Philly Fed monthly manufacturing survey index catapulted to a44-month high reading this month of 44.3 from -10.9 in December and -4.4 in October.
Late Wednesday came news of a truce agreement between Israel and Hamas, but Israel’s cabinet hasn’t ratified such, claiming that Hamas now interprets some details differently.
At their monthly meeting, OPEC+ energy ministers agreed to delay output hikes this quarter. Starting in April, a gradual phase-out of previous cuts will begin at a pace of 138,000 barrels per day over a year and a half period ending in September 2026.
Published minutes from the European Central Bank’s Governing Council meeting on December 11-12 are quite revealing. A fourth rate cut of 25 basis points resulted, but some members favored doing 50 basis points. The minutes point out a widening divergence of growth between the U.S. and euro area that has resulted in a pronounced drop of the euro against a dollar that been strong against many other currencies as well. Another cut at the next meeting will be in play but should not be viewed as a foregone conclusion. The baseline forecast of staff sees disinflation continuing and in-target inflation getting restored in the first half of this year. Until such occurs, the majority on the Council preferred to keep a gradual dialing-back of restraint.
The Bank of Korea left its policy interest rate unchanged at 3.0%, interrupting the streak of back-to-back 25-basis point cuts at the prior reviews in October and November. A peak of 3.5% had prevailed from January 2023 until the meeting this past October. The motivation for the pause came not from CPI inflation, which ended 2024 with a benign 1.9% reading. Rather officials cited escalating domestic and foreign risks that cast uncertainty over the won.
As in the United States, several British economic indicators were reported today. Monthly GDP in November rose by a slower-than-expected 0.1% on month and 1.0% on year. This resulted in zero growth on average between the three months ending in August and the ensuing three months through November. Industrial production fell 0.4% on month and 1.8% on year in November, which also undershot analyst expectations. Britain’s goods and services trade deficit of GBP 4.76 billion in November was the ninth gap in a row and much larger than a deficit of GBP 629 million a year earlier. The goods only deficit of GBP 19.31 billion was virtually the same size as in October.
Australian labor market statistics for December showed a robust 56.3k jump in jobs. Unemployment of 4.0% was just above November’s 8-month low of 3.9%, and labor market participation rose to a 5-month high.
Euroland’s seasonally adjusted trade surplus improved to EUR 12.9 billion in November from EUR 7.0 billion in the prior month. In unadjusted terms, the year-to-November surplus of EUR 161.4 billion was four times greater than in the first 11 months of 2023.
German consumer prices last month are now estimated to have risen 0.5% instead of 0.4% as reported earlier, but the year-on-year inflation rate of 2.6% remains the same as its flash indication. Still, that’s an 11-month high and up from the 43-month low of 1.6% last September. Service sector price inflation of 4.1% in December was the most in 16 months. Core inflation of 3.1% was at a 9-month high.
Italian consumer price inflation of 1.3% in December matched November’s 4-month high but is comparatively low within Euroland and down from Italy’s peak of 11.8% in October 2022.
Irish consumer prices jumped 0.9% on month in December, a 10-month high, but the 12-month increase was 1.4%, much closer to September’s 42-month low than the 38-year peak of 9.2% in October 2022.
Croatian CPI inflation rose 0.6 percentage points to an 8-month high of 3.4% last month. Such had receded previously from 13.5% in November 2022 to 1.6% by last September.
U.S. stock futures had extended yesterday’s gains overnight, but major indices are marginally in the red a half hour after trading opened. Share prices rose 1.2% in both South Korea and Hong Kong and by 2.3% in Taiwan and 1.4% in Australia. European equities made gains.
The dollar has risen against the euro, sterling, and Canadian, Australian and New Zealand currencies, but is 0.2% lower against the yen.
Bitcoin‘s price has retreated nearly 3% today. The price of oil is down 0.5%, while that of gold has risen 1.1%. 10-year U.S. Treasury and German bund yields are up two basis points apiece, while the 10-year Japanese JGB yield closed four basis points lower.
Copyright 2025, Larry Greenberg. No secondary distribution without express permission.
Tags: Bank of Korea, British industrial production and trade, ECB minutes from December 2024, German trade surplus, U.S. retail sales and import prices
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