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Daily Macroeconomic Digest

Date
Title
Teaser
Freitag 12 April
US consumer sentiment unexpectedly worsens

US: Import price index (Mar): 0.4% m/m vs 0.3% expected (prior: 0.3%)

  • Import price index rose by 0.4%, above expectations, primarily driven by a significant 4.7% surge in fuel prices with higher petroleum prices more than offsetting lower natural gas price.
  • Excluding fuels, import prices only saw a marginal increase of 0.1%, falling below anticipated levels.

 

US: Consumer confidence (Michigan) (Apr P): 77.9 vs 79.0 expected (prior: 79.4)

  • US consumer sentiment unexpectedly worsens.
  • Inflation expectations have risen for both the year ahead (reaching 3.1%, the highest in four months, up from 2.9% in March) and the five-year outlook (at 3%, the highest in six months, up from 2.8%).
  • This suggests a level of dissatisfaction with the perceived halt in the slowdown of inflation.

 

UK: Industrial production (Feb): 1.1% m/m vs 0.0% expected (prior: -0.3% revised from -0.2%)

  • Industrial production in the UK surged by 1.1%, marking a significant recovery from the revised 0.3% decline in January.
  • It represented the most substantial growth in industrial activity since June 2023, primarily fueled by a resurgence in manufacturing production (1.2% vs. -0.2%) and water supply and sewerage (1.9% vs. -2.4%).
  • On an annual basis, industrial output soared by 1.4%, accelerating from the 0.3% increase seen in the previous month and surpassing market expectations of a 0.6% rise.
  • The British economy expanded 0.1% m/m in February, following an upwardly revised 0.3% m/m rise in January and matching market forecasts. Considering the three months to February, the British GDP grew 0.2%.
Donnerstag 11 April
Forget the Fed, the ECB should be ready for an easing in June

US: Initial jobless claims (Apr.6): 211k vs 215k expected (prior: 222k revised from 221k)

  • Continuing claims: 1817 k after 1789 k the prior week.

 

US: PPI (March): 0.2% m/m vs 0.3% expected (prior: 0.6%)

  • PPI offered more limited monthly rise in prices than expected.
  • Food prices have increased further, and services remained on a stable monthly trend (0.3% m/m) while energy prices were down over the month. Within services, costs of warehouses-trade remained on sustained but slightly slower pace than prior month: 0.8% m/m after 1.1% m/m. Core PPI was by 0.2% m/m after 0.3% m/m prior month.
  • Yearly trend has re-accelerated from 1.6% y/y prior month to 2.1% y/y and core PPI from 2.7% to 2.8% y/y.
  • PPI data were les problematic than CPI for the FED and projected core PCE should stay below 0.3% m/m.

 

ECB meeting: opening the window for a first rate cut in June.

  • The ECB has not changed its key rates today as expected.
  • Views have mentioned the progress made on inflation and underlying inflation. Moreover, wage growth has moderated, and firms have partly absorbed part of the rise in labor costs.
  • This marked a significant improvement from the previous statement as dynamic of wages, prices and costs offered a more comfortable view for the ECB.
  • Forward guidance on rates have not changed as the same sentence remained in place: “policy rates will stay sufficiently restrictive for as long as necessary”.
  • A new paragraph has been added, opening the door to a first rate cut: “it would be appropriate to reduce the current level of monetary restriction” if confidence is increased by -1) inflation outlook, -2) dynamic of underlying inflation, -3) strength of monetary policy transmission.
  • Under current developments, this validates the option the ECB could ease its policy by next June (6th) meeting.
  • From Q&A:
  • Ms Lagarde has reiterated the new statement and the readiness to initiate the easing cycle if the 3 conditions are fulfilled.
  • But the ECB has no “Dots”, i.e. no pre-committed path on interest rates and remained data dependent.
  • The ECB expects inflation to fluctuate next months, integrating oil prices volatility, but it expects that inflation target should be met by mid-2025.
  • Downside risks prevail on growth while upside risks remained on inflation.
  • No new discussion about the already presented decline of its balance sheet via the reduction of TLTRO, APP and PEPP holdings pver the next quarters.

 

Italy: Industrial production (Feb.): 0.1% m/m vs 0.5% expected (prior: -1.4% revised from -1.2%)

  • Production has rebounded for durable consumer goods and capital goods but was down or flat on other sectors over the month.

 

UK: RICS house price balance (March): -4% vs -6% expected (prior: -10%)

  • Sentiment has regained more than expected by consensus on housing sector from the prior month.
  • A string rebound in future sales is expected by professionals; new demand has rebounded over the past 3 months.
  • Views on future prices have regained further, coming from the lows seen past November.
Dienstag 09 April
US: falling sentiment among small businesses

US: NFIB Small Business optimism (March): 88.5 vs 89.9 expected (prior: 89.4)

  • Sentiment has decreased among small firms, and the index has reached new lows.
  • Details offered a mixed picture about present and future trends identified by small-medium firms.
  • Views were slightly less negative about future economy, but sentiment has weakened significantly on future sales.
  • Share of firms which plan to raise prices has increased over the month, in parallel with higher compensation. Credit remained a constraint.
  • Trend has diverged between falling sentiment among small firms versus a regaining momentum in PMI-ISM which represents more large firms and exporters.

 

Montag 08 April
Germany: improving industrial activity but still depressed exports

Germany: Industrial production (Feb.): 2.1% m/m vs 0.5% expected (prior: 1.3% revised from 1%)

  • While energy was sharply down over the month, all other sectors have strongly rebounded after large disparities in terms of sectors the prior month.
  • The largest monthly rebound was seen in the construction sector, up by 7.9% m/m.

 

Germany: Trade Balance (Feb.): 21.4bn EUR vs 25bn expected (prior: 27.6bn revised from 27.5bn)

  • Exports were down by 2% after 6.3% m/m the prior month; imports were up by 3.2% m/m after 3.3% m/m prior month.
  • Exports to euro countries remained depressed over the month.

 

Norway: Industrial production (Feb.): -4.3% m/m (prior: 2.2% revised from 2.1%)

  • Manufacturing production was down by 1.1% m/m; all sectors were down except food and the largest falls were from refined oil, chemical, and pharma sectors.

 

Switzerland: Unemployment rate (sa) (March): 2.3% vs 2.2% expected (prior: 2.2%)

  • Unemployment ratio has slightly increased over the month in seasonally adjusted data; data non adjusted have shown a stable ratio and a slight decrease in unemployed.

 

Turkey: Industrial production (Feb.): 3.2% m/m (prior: 0.3% revised from 0%)

  • The rebound was driven by the manufacturing sector up by 3.8% m/m after -0.3% m/m prior month.
Freitag 05 April
US: job creations stronger than expected, but limited wage growth

US: Non-farm payrolls (March): 303k vs 214k expected (prior: 270k revised from 275k)

  • Payrolls were stronger than expected over the month; prior month data were revised lower, but Jan. data were revised from 229 k to 256 k.
  • By sector, job creations were more sustained in construction and flat in the manufacturing sector over the month.
  • Jobs creations remained stable in services at 190 k.
  • Data for services were sustained but the contribution from the various sectors raises the point that the less cyclical sectors have contributed the most to total services over the month: the largest monthly rises were seen in education-health (from 82 k to 88 k), government (from 63 k to 71 k) and leisure-hospitality (from 43 k to 49 k); on the opposite, creations have decreased in retail-trade (from 46 k to 27 k) and in business services (from 17 k to 7 k; temporary help was negative for second month).
  • Wage growth was up by 0.3% m/m after 0.2% m/m prior month (which was revised up from 0.1% m/m). Yearly trend has decreased from 4.3% y/y to 4.1% y/y.
  • Unemployment has slightly decreased from 3.857% the prior month to 3.829%. Unemployed has increased but labor force has strongly rebounded over the month (based on the household survey); on a positive news, labor participation has strongly regained from 62.5% the prior month to 62.7%.
  • Demand for labor remained sustained, probably too much from a Fed point of view; nevertheless, high creations could be acceptable if they do not translate into a wage inflation spiral. Wage growth was limited in these data but next week CPI will tell the other part of the inflation chapter.

 

France: Industrial production (Feb.): 0.2% m/m vs 0.4% expected (prior: -0.9% revised from -1.1%)

  • Industrial activity has regained but the rebound was centred on coke-refineries and mining sectors; on the opposite, production of autos and electricity was down over the month.

 

Germany: Factory orders (Feb.): 0.2% m/m vs 0.7% expected (prior: -11.4% revised from -11.3%)

  • Domestic orders have rebounded over the month, while foreign orders have contracted further.
  • By sector, orders have contracted for capital goods over the month, but rebounded for intermediate and consumer goods.
  • The situation is stabilizing but trend across different sectors remains fragile.

 

Spain: Industrial production (Feb.): 0.7% m/m vs 0.2% expected (prior: 0.6% revised from 0.4%)

  • Production has rebounded over the month, mainly driven by the consumer goods sector.
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Analysen 12.04.2024

UBP House View - April 2024

The unexpected interest rate cut by the Swiss National Bank marks the beginning of a new cycle of global easing, paving the way for new investment opportunities in the broader market. This has bolstered the Bank’s confidence in the Swiss and UK markets, which have been lagging behind the US indices. In addition, we have locked in gains on gold, which was the top performer in March.