Economy in Brief

The mood in financial markets has continued to improve over the past few days and investors remain a little more upbeat about the outlook for the world economy than they were toward the end of last year. Our charts this week offer some further perspectives about the reasons for, and response to, this improvement. In our first two charts, for example, we look at US and broader global data surprises and how the US Treasury market has responded to these. Then, on the inflation front, we provide an update on supply chain pressures and how these have been affecting inflation in our third and fourth charts. Clearly a key factor that’s been amplifying supply chain pressures in recent months concerns labour markets. So, in our final two charts, we offer some colour on, respectively, labour market shortages in the UK and labour force participation rates in Japan.

• Restrained business investment accompanies steady gain in consumer spending.
• Inventory growth exceeds trade deficit improvement.
• Price gains decelerate further.

• Index rebounds to -1 in Jan. from -4 in Dec., w/ employment (4) holding steady in positive territory and new orders (-8) and production (-4) improving but remaining in negative territory.
• Price pressures increase somewhat in Jan., w/ the prices paid and prices received indexes up minimally.
• Expectations for future activity, while down slightly, remain in positive territory this month, w/ expected employment rising; however, the indexes for new orders for exports (-8) and finished goods inventories (-7) move into negative territory.

• Home sales rise for third straight month.
• Sales changes are mixed regionally.
• Median sales price falls sharply.

• $90.27 billion deficit in December, larger than expected.
• Exports decline 1.6%, down for the fourth consecutive month.
• Imports rebound 1.9%, up for the third time in four months.

• Total orders jumped 5.6% m/m but fell 0.1% m/m when subtracting nondefense aircraft.
• Nondefense aircraft soared 115% m/m.
• Both core capital goods orders and shipments fell.

• But the index remained below zero for the second consecutive month.
• Three-month average weakened toward recession territory.
• Activity/employment dichotomy clearly visible.

• Claims had been expected to rise slightly.
• Continued weeks claimed turned back higher in the January 7 week.
• Insured unemployment rate remained at 1.1% in the week ended January 7.