Daily macro update
Thursday, April 17
The ECB cut key rates by 25 bp (2.25%) as expected.
US: Initial jobless claims (April 12): 215k vs 225k expected (prior: 224k revised from 223k)
- Continuing claims: 1885 k after 1844 k the prior week.
US: Philadelphia Fed. (April): -26.4 vs 2.2 expected (prior: 12.5)
- Business sentiment has sharply deteriorated over the month.
- Opinions have deteriorated on new orders, shipments, and employment. Prices paid and prices received were on the rise.
- The 6-month index has slightly regained (index from 5.6 prior month to 6.9) which remained particularly low. Future views have improved on new orders but remained well negative on employment and prices still viewed on the rise.
US: Housing starts (March): 1324k vs 1420k expected (prior: 1494k revised from 1501k)
- The monthly fall was more pronounced on single-family houses (-14% m/m) and reached low absolute levels based on its recent history; the decline in multifamily houses was less pronounced (-3.5% m/m).
- Building permits have regained from 1459 k the prior month to 1482 k, thanks to a rebound in multifamily houses while other categories have contracted.
- Prices and volatile interest rates have weighed down on demand.
The ECB cut key rates by 25 bp as expected (deposit rate at 2.25%).
- In its statement, the ECB mentioned a deteriorating outlook on growth due to trade tensions but also mentioned some resilience in activity. Uncertainties are on the rise, with risks of tighter financing conditions.
- The ECB seems confidence on the inflation outlook and reiterated that disinflation is on track and wage growth on a moderating process.
- The ECB removed any reference to its monetary policy viewed the prior meeting as being “meaningfully less restrictive”; the ECB could view key rates now close to or at neutral range.
- The policy remained data dependant and decisions will be made meeting by meeting as seen in past meetings.
- From Q&A:
- Lagarde developed downside risks on future activity related to trade tensions but pointed to uncertain net impact on inflation. Inflation is viewed with two-sided risks: German measures will boost demand while trade uncertainties are depressing global and domestic demand.
- Despite downside risks on activity, it seemed too early and not necessary for the ECB to turn stimulative on its policy now.
- The removal of any mention to a restrictive or not monetary policy is justified by uncertainty on current activity. The ECB seems not yet to be ready to act pre-emptively on rates given the risks, and no proposals were made in favor of a 50 bp rate cuts today.
Germany: PPI (March): -0.7% m/m vs -0.1% expected (prior: -0.2%)
- Energy prices were sharply down over the month (-2.8% m/m after -1% m/m prior month), due to lower oil, mining, and utility prices.
- Consumer good prices were up by 0.3% m/m after 0.1% m/m prior month.
- Yearly trend has turned negative, down by 0.2% y/y after 0.7% y/y prior month.
Switzerland: Trade balance (March): 6.35 Bn CHF (prior: 4.74Bn)
- Trade surplus has rebounded over the month.
- Real exports were up by 3.2% m/m after 3.9% m/m prior month; real imports were up by 4.5% m/m after 3.7% m/m prior month.
Turkey: Central bank has raised key rates from 42.50% to 46% (one week rate)
- The bank mentioned demand was still resilient and fuelled upside risks on inflation on the short term.
- A tight policy should remain in place if pressures remain on inflation, but underlying trend in inflation has improved medium term.
Wednesday, April 16
Sustained US retail sales as expected; declining inflation in UK and eurozone
US: Retail sales (March): 1.4% m/m as expected (prior: 0.2%)
- Rebound in sales was in line with expectations; sales were stronger for autos, building materials, sports and also regained on eating-drinking sectors. Gasoline consumption was under contraction over the month.
- Core sales (sales ex autos, building materials, gasoline, and food) were up by 0.4% m/m after a strong 1.3% m/m prior month. A positive signal for Q1 consumption included in GDP.
- Part of the rebound in good purchased was probably made ahead of the announced rises in tariffs, but consumption was also good on services; no collapse in Q1 consumption but a more moderate growth trend after the record 4.0% q/q reached in Q4-24.
US: Industrial production (March): -0.3% m/m vs -0.2% expected (prior: 0.8% revised from 0.7%)
- Manufacturing production was up by 0.3% m/m after 1.0% m/m prior month; the activity was sustained in autos, computers, and machinery sectors, while production has contracted in energy and utility sectors (good weather conditions).
US: Business inventories (Feb.): 0.2% m/m as expected (prior: 0.3%)
- Inventories were on a moderate growth while sales have accelerated (1.2% m/m).
US: NAHB housing market index (April): 40 vs 38 expected (prior: 39)
- Sentiment was slightly better than expected and the prior month.
- Opinions have improved on current sales and future requests.
Eurozone: CPI (March): 0.6% m/m as expected (prior: 0.4%)
- Final data confirmed the rebound in monthly inflation driven by good prices, up by 1.9% m/m (0.4% m/m prior month).
- Energy prices were down by 1.4% m/m (-0.3% m/m prior month), while services were up by 0.4% m/m (0.6% m/m prior month).
- Yearly trend has declined from 2.3% y/y prior month to 2.2% and core inflation from 2.6% to 2.4% y/y, thanks to pronounced decline in services (from 3.7% y/y to 3.4% y/y).
Italy: CPI (March): 1.6% m/m as expected (prior: 0.1%)
- Prices of clothes were up by 22% m/m and have driven up total inflation over the month.
- Yearly trend has reaccelerated from 1.7% y/y prior month to 2.1% y/y.
UK: CPI (March): 0.3% m/m vs 0.4% expected (prior: 0.4%)
- Prices have accelerated for clothes, up by 2.3% m/m (after -3% m/m prior month) and remained sustained for household goods (0.6% m/m after 1.1% m/m) and hotel-restaurants (0.7% m/m after 1.1% m/m prior month).
- Yearly trend has declined from 2.8% y/y prior month to 2.6% y/y and marginally from 3.5% to 3.4% y/y on core inflation. Despite this progress, yearly trend remained high for health (5% y/y), communication (6% y/y) and education (7.5% y/y), but progress has been seen on services (4.7% y/y after 5% y/y prior month).
- This improving trend in headline and slower trend in services could re-open the door to other rate cuts by the BoE in H2-25, or even early in May but there are still short-term upside risks related to rise in regulated prices of energy in April.
Tuesday, April 15
Falling medium-term business sentiment in the US (NY Empire 6-month) and in Germany (ZEW expectations)
US: Empire manufacturing (April): -8.1 vs -13.5 expected (prior: -20)
- Business sentiment has improved over the month, being less negative.
- On current situation opinions were less negative on orders, shipments, and employment; prices paid, and prices received were on the rise.
- Nevertheless, the 6-month index has sharpy declined over the month; opinions have decreased on new orders, shipments and also on employment and capex; prices paid and received were also on a strong rise during the month.
- Uncertainties related to trade and economic policy continue to weigh down on medium-term business sentiment.
Eurozone: Industrial production (Feb.): 1.1% m/m vs 0.3% expected (prior: 0.6% revised from 0.8%)
- Production of capital goods has rebounded while it decreased for energy and consumer durable goods over the month.
- Despite the rebound seen over the past two months, the index of production was just back to the levels seen in past Aug. and April 2024.
France: CPI (March): 0.2% m/m as expected (prior: 0.1%)
- Final data have confirmed the modest rise in monthly inflation.
- Over the month, prices have regained for food and clothes, while they sharply declined on energy (oil prices down by 3% m/m). Services were flat over the month, thanks to a decline in transport.
- Yearly trend remained stable at 0.9% y/y; several sectors have contributed to falling inflation: oil, health care, communication, and manufactured goods prices; on the opposite, prices of fresh food and services have shown yearly trend above the headline data.
Germany: Zew (April): -14 vs 10 expected (prior: 51.6)
- Sentiment on current situation has just turned slightly less negative (index up from -87.6 prior month to -81.2), but expectations have reversed and sharply decreased.
- Sentiment among financial community has declined with rising threats from the US tariff policy. The largest fall in sentiment over the month was seen in auto, steel, pharma, and engineering sectors.
Germany: Wholesale price (March): -0.2% m/m (prior: 0.6%)
- Yearly trend prices have declined from 1.6% y/y the prior month to 1.3% y/y.
UK: Unemployment rate (ILO) (Feb.): 4.4% as expected (prior: 4.4%)
- Over the Dec.-Feb. period, unemployed has increased, mostly for unemployed above 6 months and above 12 months, but the ratio remained stable.
- In March, continuing claims were up from 4.6% to 4.7%; jobless claims have increased from 16.5 k to 18.7 k. Vacancies remained on a medium-term declining trend (from 799 k the prior month to 781 k).
- Signs of weakness have developed in labor, ahead of major rises in labor costs.
UK: Average earnings incl. Bonus (Feb.): 5.6% y/y vs 5.7% expected (prior: 5.6% revised from 5.8%)
- Wage growth has moderated, and prior moth data were slightly revised lower.
- Over the month, wage growth has accelerated for construction and hotel-retail sectors, while they moderated in other sectors.
Poland: CPI (March): 0.2% m/m (prior: 0.1%)
- Final data have confirmed limited rise in monthly prices; while prices of clothes and communication have reaccelerated over the month, they declined on energy and transport sectors.
- Yearly trend was stable at 4.9% y/y.
Monday, April 14
Yearly trend in Swiss producer-import prices still negative due to declining import prices
Switzerland: PPI-import prices (March): 0.2% m/m (prior: 0.3%)
- Import prices were flat over the month (0.3% m/m prior month); producer prices were up by 0.1% m/m (0.3% m/m prior month).
- Yearly trend has regained for producer prices, from 0.2%y/y prior month to 0.3% y/y; import prices were still negative, down by 0.9% y/y after -0.8% y/y prior month. The combined producer-import prices remained negative at unchanged pace -0.1% y/y.
Turkey: Current account (Feb.): -4.41bn USD vs -4.4bn expected (prior: -4.0bn revised from -3.8bn)
- Deficit has increased over the month for goods and lower surplus from services.
- Official reserves have declined by USD 2.9 bn after a rebound of USD 6.4 bn the prior month.
Friday, April 11
US consumer confidence down sharply
US: Consumer confidence (Michigan) (April Prel): 50.8 vs 53.8 expected (prior: 57.0)
- Current conditions: 56.5 vs 60.8 expected (prior: 63.8)
- Expectations: 47.2 vs 50.7 expected (prior: 52.6)
- According to this survey, consumer confidence fell more than expected to an almost 3-year low while inflation expectations surged to multi-decade highs: +4.4% over the next 5 to 10 years and +6.7% in the coming year.
- The expectations index fell to its weakest level since… 1980.
- The share of consumers expecting higher unemployment in the coming year rose to the highest since 2009 and consumer's outlook of the financial situation decreased to a record low.
US: PPI (March): -0.4% m/m vs 0.2% expected (prior: 0.1% revised from 0.0%)
- PPI y/y: 2.7% vs 3.3% expected (prior: 3.2%)
- Core PPI: -0.1% m/m vs 0.3% expected (prior: 0.1% revised from -0.1%); 3.3% y/y vs 3.6% expected (prior: 3.5%)
- The headline and core index came in well below expectations and the components relevant for core PCE were soft.
- This adds to evidence of muted inflation ahead of the tariffs implementation.
UK: Industrial production (Feb.): 1.5% m/m vs 0.1% expected (prior: -0.5% revised from -0.9%)
- IP y/y: 0.1% vs -2.3% expected (prior: -0.5% revised from -1.1%)
- Well above expectations, which can be partly explained by manufacturers building inventory in anticipation of US tariffs as UK goods exports to the US rose to the highest level since 2022 (+7% in February).
Switzerland: Seco Consumer confidence (March): -34.8 vs -32.0 expected (prior: -33.6)
- Lowest level in 4 months.