A Typical Quarter-End Deluge of Economic Data
March 31, 2023
Prior to the U.S. release of personal income and spending, the dollar was showing overnight gains of 0.4% against the Swiss franc, Japanese yen and Australian dollar and of 0.3% versus the euro and on a weighted basis as measured by the DXY index. Nonetheless, the dollar over the whole first quarter lost ground on balance. News of former President Trumps indictment has not impacted trading.
Share prices in Asia today advanced 0.9% in Japan, 1.8% in India, 1.0% in South Korea, and 0.4% in China. European equities are up around 0.5%, and U.S. stock futures have edged up marginally.
Among 10-year sovereign debt yields, the British gilt rose 3 basis points, the German bund slid a basis point, the Japanese JGB is 1 bp firmer, and the U.S. Treasury bond is steady.
Prices for WTI oil, bitcoin tokens and gold are respectfully up 0.7%, down 0.3%, and unchanged.
Japanese retail sales sank 4.4% on month in February but still posted their largest 12-month rate of increase (6.6%) in 21 months. Industrial production rebounded from January’s 5.3% plunge, climbing 4.5% last month, but the year-on-year change (-0.6%) was negative for a fourth straight month. Core Tokyo consumer price inflation in March of 3.2% was at a 6-month low. Housing starts in February were 0.3% fewer than a year earlier, but construction orders soared 22.3%. Japan’s jobless rate increased 0.2 percentage points to a 4-month high of 2.6% in February, and the ratio of job openings to seekers fell marginally.
British GDP growth in 4Q 2022 was revised from being zero percent to a 0.1% positive uptick, which boosted the year-on-year growth rate to 0.6%, still representing a 7-quarter low point. The U.K. current account deficit of GBP 2.483 billion was down very sharply from GBP 12.744 billion in the second quarter. The deficit in 2022 as a whole equaled 3.8% of GDP, its largest relative size since 2018.
The British Nationwide house price index dropped 0.8% on month and 3.1% on year in March. That was the biggest 12-month decline in 164 months and a dramatic implosion compared to a 14.3% year-on-year advance recorded in March 2022.
Euroland’s jobless rate this past month unexpectedly stayed at February’s record low of 6.6%. Analysts had anticipated a marginal uptick. A sharp additional deceleration of consumer price inflation to 6.9% in the euro area this month from 8.5% in February and 10.6% last October overstates the tone of this report. The drop reflects energy, which posted the first year-on-year price decline in two years (-0.9%) and obscures additional price acceleration in food to 15.4% and services to 5.0%. Core inflation, which excludes food and energy, rose 0.1 percentage points to a record high of 5.7%, and the 6.9% total inflation rate was over three times the European Central Bank’s target. Yet another disturbing element of the CPI report is that prices posted an even larger month-on-month rise in March of 0.9% after February’s 0.8% advance.
French consumer price inflation settled back to 5.6% in March from February’s 38-year peak of 6.3%. Producer price inflation also slowed in France, dropping to 15.9% in February from the record high of 29.8% six months earlier. A third French data release today showed weaker-than-forecast household spending in February, which dropped 0.8% on month.
Italian consumer price inflation this month of 7.7% was down from 9.1% in the prior month and a 37-year high 11.8% in both October and November of last year but still above 6.5% in March 2022. Core inflation in Italy rose further to a record 6.4%. Also in Italy, industrial sales fell 1.1% in January, their third drop in five months.
German import prices contracted on month for a sixth straight time, falling 2.4% in February, which lowered the 12-month rate of increase, which having crested at 32.7% last August is now just 2.8%.
German retail sales volume, on the other hand, fell in February by 1.3% following drops of 0.3% in January and 5.8% in December. Analysts had anticipated a rise, but the monthly drop was enough to lengthen the 12-month rate of decline to 7.1%, the worst on-year drop since last June.
A 1.1% rise in Swiss retail sales was only enough to eke out a 0.3% uptick compared to the year-earlier level.
Sri Lankan CPI inflation eased 0.3 percentage points to a 10-month low in March of 50.3%. A record high of 69.8% was touched last September. Croatia also reported continuing double-digit consumer price inflation for March. Although down from a record high of 13.5% at at its lowest point in 11 months, the 10.6% reading compares unfavorably with 7.3% in March 2022.
Like the South African Reserve Bank and Central Bank of Colombia, news arrived late yesterday that the Bank of Mexico also was raising its policy rate. The increase of 25 basis points was smaller than earlier moves but lifts the overnight interbank rate to a record high of 11.25% versus a pandemic low of 4.0% between February and June of 2021. The new rate level is well above CPI inflation of 7.6%, but officials do not expect a return to the target midpoint of 3% until late next year.
A 0.5% monthly rise in Canadian GDP in January, compiled from the supply side, surpassed analyst expectations and associated with a 3.0% advance from a year earlier. Industrial production grew 0.4% on month, the most in four months, but just 1.3% on year.
U.S. personal consumption growth of 0.2% in February undershot expectations to a marginal degree. The PCE price deflator went up only half as much as January’s monthly 0.6% rise and was associated with a 0.3 percentage point deceleration in that measure of inflation to a 17-month year-on-year low of 5.0%. The core personal consumption price deflator dipped 0.1 percentage point to 4.6%, a 15-month low.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: British GDP and current account, Euroland unemployment and CPI, Japanese retail sales and industrial production, U.S. personal consumption price deflator
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