- Crude oil prices touch 15-month low.
- Metals prices mostly weaken.
- Lumber prices improve.
USA| Mar 20 2023FIBER: Industrial Commodity Prices Decline Broadly
by:Tom Moeller
|in:Economy in Brief
Europe| Mar 20 2023EMU Trade Deficit Is Shrinking
The EMU trade deficit has been contracting for a number of months. The deficit declined in January to €11.3bln from €13.4bln in December. The 12-month average for the deficit is €27bln. To analyze EMU trade, I look at manufacturing and nonmanufacturing trade and trends separately. Viewed that way, the manufacturing trade surplus was lower in January as it fell to €26bln from €31bln in December. That means trade improvement was driven by performance on the nonmanufacturing accounts, and it was. The nonmanufactures deficit shrank to €37.3bln in January from €44.3bln in December. The manufactures surplus worsens by €5bln month-to-month while the nonmanufactures account improved by €7bln month-to-month causing the overall trade balance situation to improve. The improvement on the nonmanufacturing account traces back to August of last year while the drop off in the manufacturing surplus is a new development.
European trade trend overview The overpowering trend for EMU trade overall as well as for individual countries in Europe is that trade flows are slowing. Despite inflation being high, the growth rates of nominal trade flows are slowing. Year-on-year growth is faster than 3-month annualized growth for exports of manufactured and nonmanufacturing; the same is true for EMU imports. For another eight European economies, we see the same slowing in annualized 3-month trade flow growth compared to year-over-year growth.
EMU trade flow trends EMU export trends show exports of manufactures are slowing transiting from 5.8% growth over 12 months to a -13.6% annualized pace over three months. Nonmanufactured exports are more resilient slowing only modestly to a 19.1% annual rate over three months from 21.3% over 12 months. Together these flows cause overall EMU exports to slow sequentially from 12-months to 6-months to 3-month, logging a 3-month decline at a -8.2% annual rate.
EMU import flows show imports of manufacturers decelerating from 5.1% growth over 12 months to a 3-month pace of -19.1%. Nonmanufactures imports slow from an 11.8% gain over 12 months to an annualized three-month drop at a -45.5% annual rate. As a result, overall imports in the EMU also decline sequentially from growth of 7.2% over 12 months to a contraction at a -16.6% pace over 6 months to a -29.4% pace over 3 months.
Country patterns Germany and France echo the pattern of decline in the EMU with exports and imports in both countries showing sequential decelerating trends from 12-months to 6-months to 3-months. In the U.K., exports fall sequentially and at an alarmingly fast pace over 3 months, while the decline in imports is muted by comparison. Although the U.K. also shows a decline in imports over 12 months which is a weaker result than for either Germany or France - or EMU for that matter – U.K. exports are much stronger than for Germany, France, or the EMU.
Exports only We include export only trends for five other European nations. They all show weaker growth over 3 months than over 12 months, but also show a great deal of variation in their growth rates compared over each horizon. Belgium and Finland have the weakest three-month growth, registering sharp declines. In comparison, exports by Spain, Portugal, and Italy log rates of growth in double digits or rates that round up to double digits over three months. Spain, Portugal, and Italy also log export increases over 12 months while Belgium and Finland log modest declines over 12 months.
- Monthly decline is eleventh in a row.
- Coincident indicators post minimal gain.
- Lagging indicators rise modestly.
by:Tom Moeller
|in:Economy in Brief
USA| Mar 17 2023U.S. Industrial Production Stalls in February
- Production weakness is broad-based amongst market groups.
- Capacity utilization is unchanged.
by:Tom Moeller
|in:Economy in Brief
Global| Mar 17 2023Charts of the Week (Mar 17, 2023)
Last week’s failure of a US bank and growing fears about the underlying health of the world’s broader banking sector have dominated the financial headlines in recent days. A trend toward risk aversion has clearly been in the ascendancy. And central banks are now under growing pressure to offer targeted support and more generally to halt their tightening campaigns in order to restore financial stability. For while banks’ funding models and regulatory oversight are now being actively discussed, a key root of the present crisis concerns the synchronized – and relatively aggressive – campaign from central banks to squeeze out inflation. In our first two charts this week we illustrate how financial stress has been building and how markets have re-assessed their expectations for Fed policy in recent days. Our next two charts, however, illustrate how those expectations have been shifting in ways that are somewhat counter to the global economic scene. Still, at the margin, incoming data over the last few days suggest that labour market activity and inflation have continued to cool, which should alleviate the current dilemmas for policymakers. Our fifth chart, showing high frequency indicators of hiring activity, offers one example of that trend. Our final chart, showing how global air passenger traffic appears to be slowing down as well, is also possibly a sign that COVID-related distortions to the world’s economic fabric (and their inflation implications) are now normalising as well.
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by:Andrew Cates
|in:Economy in Brief
USA| Mar 16 2023U.S. Housing Starts Improve in February
- Multi-family starts surge; single-family rise moderately.
- Starts are mixed across the country.
- Building permits surge, also powered by multi-family.
by:Tom Moeller
|in:Economy in Brief
USA| Mar 16 2023U.S. Import Prices Dip in February While Export Prices Unexpectedly Rise for the Second Straight Month
- Import prices ease 0.1% in Feb. to the lowest index level since Jan. ’22, down for the seventh time in eight months, led by a 4.9% decline in imported fuel prices.
- Excluding fuels, import prices rise 0.4%, up for the third consecutive month.
- Export prices beat expectations again rising 0.2%, reflecting a 1.0% rebound in ag export prices and the second successive gain in nonag export prices.
- Import and export prices post their first negative y/y rates since late-2020.
USA| Mar 16 2023Philadelphia Fed Factory Index Stabilizes in March
- Index edges higher after plunging to lowest level since 2020.
- New orders, shipments and employment readings weaken.
- Prices paid index remains near recent low.
by:Tom Moeller
|in:Economy in Brief
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