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Key information from the past week
1. Poland: Trade Balance
According to preliminary data from the National Bank of Poland, the balance of trade in goods in February was positive at PLN 1.3 billion. In February 2022 it was also positive (PLN 2.0 billion). As a result, the period from March 2023 to February 2024 closed with a positive balance of PLN 28.1 billion. In 2022, for the corresponding period, the balance was -89.9 billion. The current account closed with a positive balance of PLN 48.6 billion.
Source: NBP. Own compilation.
2. Germany: Industrial Production
In February 2024 German industrial production rose by 2.1% month-on-month in real terms (adjusted for price changes) and was 4.9% lower compared to February 2023. The annual growth rate was close to an estimate based on the toll mileage index model. Published by Destatis, the truck toll mileage index (German: Lkw-Maut-Fahrleistungsindex), fell by 1.0% in March compared to January and was 0.5% lower than the year before. A model based on the correlation of this index with the level of production indicates a decline in the manufacturing index in March, but also a further improvement in the y/y manufacturing growth rate, which should be around -3.8% y/y in March.
Source: Destatis. Own compilation.
3. USA: Inflation
According to the Bureau of Labor Statistics, consumer price growth came in at an annual rate of 3.5% in March, higher than expectations of 3.4%. This represents a 0.3 p.p. increase in the price growth rate compared to February. Month to month, prices rose by 0.4%. The level of core inflation (excluding food and energy prices) was also 0.1% higher than expectations (which pointed to a decline) at 3.8% y/y.
When analyzing CPI inflation by component, the contribution of goods (excluding energy) was negative and declined. The contribution of energy prices returned to positive levels at 0.15%. The contribution of food prices was stable. The contribution of services rose to the highest level in six months. In addition to PPI inflation, industrial price growth rate surprised negatively. The PPI index for final demand rose by 1.6% against expectations of 1.2%. The core PPI also rose by 2.0% y/y (against expectations of 1.9%).
Source: BLS. Own compilation.
Source: BLS. Own compilation.
Source: BLS. Own compilation.
4. USA: Inflation - “Stickiness"
Interesting observations can be made by looking at US inflation from the inertia and rate of change of the various components of inflation. An analysis of this kind is prepared monthly by the Atlanta Fed. This outlook is based on the assumption that some items that make up the consumer price index change values frequently, while other ones change slowly. "Sticky" prices may not respond to changing market conditions as quickly as other, "flexible" prices. The Fed is examining whether these two sets of prices – rigid (sticky) and flexible ones – provide insights into different aspects of the inflation process. It turns out that sticky prices are more responsive to expectations of future inflation than prices that fluctuate frequently, while flexible prices react more strongly to economic conditions, such as economic stagnation. Importantly, this sticky-price measure appears to include an inflation expectations component, which can be useful when trying to determine the direction of inflation. Recent readings of these measures indicate a significant level of anchoring of inflationary processes in the US economy.
Source: Atlanta FED. Own compilation.
5. USA: Industrial Inflation (PPI)
The PPI index for final demand rose by 2.1% against expectations of 2.2%. The core PPI also rose by 2.4% y/y (against expectations at 2.3%). The figures for February were revised from 2.2% to 2.1%.
6. Eurozone: Interest Rates
The European Central Bank's Governing Council has again decided to leave the ECB's three key interest rates unchanged. The ECB announcement noted a continuation of the decline in inflation, a decline in most core inflation measures, a slowdown in wage growth, and absorption of rising labour costs by companies at the expense of profits. In addition, it has been pointed out that financing conditions remain restrictive and previous interest rate hikes continue to weigh on demand, helping to reduce inflation. Domestic price pressures, however, are strong and keep service price inflation high.
7. Japan
Industrial production fell 3.9% year-on-year in February. It was 0.6% down from January. Capacity utilization also fell by 0.5%. According to preliminary data, the level of machinery orders was 3.8% lower than a year earlier. The level of industrial price inflation (PPI) was 0.8% year-on-year, as expected.
8. China: Prices
China's consumer inflation fell in March from 0.7% y/y to 0.1% y/y against expectations of 0.4%. Industrial inflation as measured by the PPI index came in at -2.8% y/y, as expected, 0.1 p.p. lower compared to February. Both M1 and M2 money supply measure growth rates were below expectations at 1.1% and 8.3% year-on-year, respectively.
9. China: Trade Balance
Chinese exports fell by 7.5% in March in USD y/y against expectations of -1.9%. February saw a year-on-year growth rate of 5.6%. Imports also surprised downwards. They declined by 1.9% in USD y/y against an expected increase of 1.0%. In local currency, export and import growth rates were -3.8% and 2.0%, respectively.
This week:
- Poland: CPI, core inflation, consumer sentiment
- Eurozone: PPI (Germany), industrial production, ZEW
- USA: Industrial production, retail sales
- Japan: CPI
- China: GDP, retail sales, industrial production
