In China, the manufacturing PMIs were better in January than the month before but the improvement was even stronger in services. In the Eurozone, the European Commission’s economic confidence index improved in January.
Sentiment in industry and services increased more than expected. Fourth quarter GDP growth also brought a positive surprise with an increase of 0.1% versus the third quarter. The consensus had expected a slight contraction. Headline inflation declined on an annual basis and was even negative on a monthly basis. Annual core inflation was stable however. The ECB hiked its policy rate with 50bp and intends to do the same at its March meeting. Monthly producer price inflation unexpectedly increased in December. In France, consumer spending declined unexpectedly in December. GDP growth was better than expected in the fourth quarter (+0.1% versus 0%). In Germany however, GDP shrunk (-0.2%), against an expectation of an unchanged number. In Japan, consumer confidence recorded a small improvement in January. In the UK, the Bank of England raised its policy rate again, with 50 basis points. The Federal Reserve on the other hand scaled back its pace of tightening by deciding on a 25bp increase. The message remains hawkish however. The Conference Board consumer confidence index weakened in January. The participants are more upbeat about the present situation but gloomier about the outlook. The manufacturing ISM declined more than anticipated and, at 47.4, is now well below 50. Finally, the week ended on a very strong note with an impressive labour market report. Job creations in January were far ahead of the consensus -on top of an upward revision of the December number-, the unemployment rate declined to 3.4%, the weekly hours worked increased as well as the participation rate. In addition, the ISM services index jumped to 55.2, beating expectations by a wide margin. The US economy remains surprisingly resilient.
Latest indicators
The week ahead
A light week ahead of us in terms of data with Eurozone retail sales, the EcoWatchers’ survey in Japan, labour market
and wage data in France, UK’s fourth quarter GDP numbers and, in the US, University of Michigan confidence.
