USD: Inflation slowing down but recession worries speeding up; EUR: German producer price inflation stabilises, indicating steadier energy prices; ZAR: Saffa a sleeping economic giant in darkness, literal darkness; GBP: BoE contemplating hike rates after national wage increase; JPY: Record breaking trade deficit figures for April, as Japanese export growth slacks; AUS: Local businesses jittery after recent national wage increment.
USD: INFLATION ON ICE AMIDST RECESSION ANGST
Just a few months close to a 40-year-high inflation rate, US prices are finally stabilising. Latest data on consumer and producer prices show inflation at its slowest speed since the start of its downward turn.
The Producer Price Index listed a 2.7% annual growth percentage in March, whilst the Consumer Price Index (CPI) arrived at a 5% percentage. The CPI has come down decidedly from a peak of 9.1%.
A US March jobless rate of 3.5% coupled with sharply lowered oil prices may cause sticky inflation for the next few months. In the first quarter of 2023, the Dow was up 2.5%, S&P 500 more than 8%, and the Nasdaq Composite toppled over 16% impressive figure.
Such resilience in the US private sector has contributed enormously to the stability of the US economy during these times.
EUR: GERMAN PRODUCER PRICE INFLATION HALTS
German producer prices of industrial products increased in March, but at the slowest rate experienced in the last two years. The 7.5% CPI increase for March was a huge improvement from the 15.8% of February.
Energy prices are still the primary cause of year-on-year European CPI increases. Notable increases of energy product prices are inclusive of capital goods, non-durable goods, intermediate goods, and durable consumer goods.
Resultant of producer prices stalling, the EUR/USD pairing strenghtened a wee bit for about a week.
ZAR: A STALLING ECONOMY IN DARKNESS, LITERAL DARKNESS
Load-shedding (power cuts) at a higher intensity has proven extremely harmful to general economic activity and resulted in a subsequent downward revision to growth expectations. This has weakened the South African supply chain consumer tremendously.
These and, critically, weakening Saffa consumer fundamentals, imply that the domestic economy will likely stall this year before gradually recovering over the medium-term.
In line with these mounting idiosyncratic challenges, the FNB Economics Commentary team have provisionally trimmed the Saffa economic growth forecast to 0.1% for the year of 2023. A sharp contrast from the more optimistic 0.4% figure published in January 2023.
GBP: BoE TO HIKE RATES IN LIGHT OF RECENT UK PAY GROWTH
Last Tuesday, the latest economic data released from the UK Office of National Statistics revealed an increase of 3.8% in the UK unemployment rate. This is slightly more than the 3.7% initially projected figure.
Local pay (salaries and wages) growth, excluding bonuses, has grown by 6.6% over the the first quarter of 2023. Although 169,000 people have entered/re-entered the British workforce, the national number of workers still remains lower than pre-pandemic levels.
The Sterling strengthened over March's time and UK government bond yields shot to a one-month high. Speculators are firmly committing to the belief that the Bank of England (BoE) will carry on its rate hike momentum and will possibly topple a 4.5% figure in May.
JPY: RECORD TRADE DEFICIT FIGURES
Japan's trade deficit nearly quadrupled to a record-breaking ¥21.73 trillion yen in the 2022 fiscal year.
Economists speculate that such a rapid decline in international trade in Japan is potentially due to the opt out in Chinese shipments of cars and steel, due to weakened local Japanese demand and higher interest rates around import tariff payments.
The Yen's continual currency depreciation has become a concern for international investors, as Japan is a resource-scarce country, and has historically relied on imports and exports to strengthen their local currency.
AUS: LOCAL BUSINESSES JITTERY IN THE MIDST OF WAGE HIKES
The National Australian Bank (NAB) Business Confidence Index (BCI) took another nose dive for a second consecutive quarter, failling by 4 points.
The NAB BCI found that most Aussie businesses remain in angst around the national issue of skilled worker shortages and national wage increases.
A noteworthy silver lining is the improvement of Aussie supply chain efficiency and cost, as global inflationary pressures seem to be in some sort of a peaking, stalling season.
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