Employment Costs Moderate in Q4 as Fed Meets on Rates

Employment costs moderated at the end of 2022 back to levels that are still historically strong, according to the employment-cost index (ECI). Private and total workers saw compensation rise 1% in Q4 (seasonally adjusted), and 5.1% on the year. This followed a 1.2% increase for September quarter. Benefit costs increased 0.8% (versus 1.0% prior). Fed officials have said they pay close attention to the employment-cost index, seeing it as a comprehensive measure of wage growth. Wages and salaries account for … Continue reading “Employment Costs Moderate in Q4 as Fed Meets on Rates”

Consumer Sentiment Improves with Inflation Expectations Lowest Since April 2021

The final January University of Michigan Index of Consumer Sentiment at 64.9 (consensus 64.6) slightly improved from the preliminary reading of 64.6. The final reading for December was 59.7. A year ago, in January 2022, the index stood at 67.2. The report reflects some of the improved reports we have seen in new and pending home sales, mortgage applications and GDP. consumer sentiment has picked up from a despairing trough. Easing inflation is a big factor, given that is front … Continue reading “Consumer Sentiment Improves with Inflation Expectations Lowest Since April 2021”

Fed Impact Felt as Personal Spending and Inflation Soften in December

The core personal consumption expenditure price index (Core PCE prices) in the US, which exclude food and energy, rose by 0.3 percent month-over-month in December of 2022 as expected.  The annual rate, the Federal Reserve’s preferred gauge of inflation, fell to 4.4 percent from 4.7 percent, also within expectations.  Notably real personal spending declined 0.3% month-over-month in December.  We are seeing a continued moderation of inflation pressures; however, services inflation was up 0.5% month-over-month following a 0.3% increase in November … Continue reading “Fed Impact Felt as Personal Spending and Inflation Soften in December”

US PMI Reflects Hesitancy to Expand Capacity in Uncertain Conditions in 2023

The S&P Global US Manufacturing PMI rose to 46.8 in January of 2023 from 46.2 in December, better than expected but well below contraction pivot of 50. Factory activity continues to be hit by supply constraints and rampant inflation. S&P Global. reported private sector firms in the US registered a further decline in output at the start of 2023, according to their latest ‘flash’ PMI™ with the fall in business activity softened to the slowest in three months. The economy … Continue reading “US PMI Reflects Hesitancy to Expand Capacity in Uncertain Conditions in 2023”

Japan Inflation Hits 32 Year High in December

Japan’ s annual inflation rate rose to 4.0 % in December 2022 from 3.8% a month earlier, the highest reading since January 1991. The BOJ had been trying to get Japan on an inflationary bend for years, now it is clearly hear. The quickening pace of prices comes from high prices of imported raw commodities and yen weakness. Food prices are running up 7.0% vs 6.9% in November, water charges up 15.2% vs 14.1%, electricity (21.3% vs 20.1%) and gas … Continue reading “Japan Inflation Hits 32 Year High in December”

Turkey Central Bank Left Interest Rates Unchanged at 9% As Lira Hits New Lows

The Central Bank of Turkey left its key one-week repo rate unchanged at 9% in its January meeting on Thursday, as expected, saying the current policy rate is adequate.  The bank had cut key interest rates in November for the fourth consecutive month. The Turkish lira held a record low of 18.8 per USD after the announcement. There has been concerted pressure from President Recep Tayyip Erdogan wanting rates cut to stimulate the economy, but the collapsed Lira and soaring … Continue reading “Turkey Central Bank Left Interest Rates Unchanged at 9% As Lira Hits New Lows”

Federal Reserve Beige Book Highlights Housing Markets Continued to Weaken

The Federal Reserve released its Biege Book Wednesday prepared at the Federal Reserve Bank of Cleveland based on information collected on or before January 9, 2023.  The report was consistent with what we have seeing with economic data released, not a lot has changed over the past month, the economy is weakening. It was reported housing markets continued to weaken, clearly higher interest rates have further dented home sales and household finances. Notably many retailers noted increased difficulty in passing … Continue reading “Federal Reserve Beige Book Highlights Housing Markets Continued to Weaken”

US Producer Price Inflation Fell More Than Expected in December

US Producer price inflation for December fell -0.5% vs. -0.1% consensus and +0.2% in November (revised from +0.3%). On a year-over-year basis, the index for final demand was +6.2% Y/Y vs. +6.8% expected and +7.3% prior (revised from +7.4%). The release was in line with a softer Consumer Price Index we saw last week. Core PPI rose +0.1% vs. +0.1% expected and +0.2% prior (revised from +0.4%). Core PPI was +5.5% Y/Y vs. +5.7% expected and +6.2% prior (unchanged). In … Continue reading “US Producer Price Inflation Fell More Than Expected in December”

US Consumer Services Inflation Still Rising, 7.5% in December from 7.2% in November

The December CPI report had been overblown, like everything it seems these days. The headline numbers were as expected. The Consumer Price Index declined 0.1% m/m (consensus 0.0%), with a 9.4% m/m decline in the gasoline index, while core CPI, increased 0.3% m/m as expected. On a year-over-year basis, CPI was 6.5% from 7.1% in November. Core CPI was up 5.7% versus 6.0% in November. CPI was lower for a sixth straight month to the lowest since October 2021. However, services … Continue reading “US Consumer Services Inflation Still Rising, 7.5% in December from 7.2% in November”

Germany Inflation Falls in December with Government Help on Natural Gas Bills

Germany’s annual consumer price inflation fell to 8.6% in December 2022, from 10% reported in November and below the market consensus of 9.1% preliminary estimates showed. Inflation has been running rampant mainly due to energy costs which has led the ECB to raise rates aggressively and has impacted the German Bund sending yields to levels not seen since 2011. It was the inflation lowest rate since August. The German government with a one-time payment in December lowered household natural gas … Continue reading “Germany Inflation Falls in December with Government Help on Natural Gas Bills”