Written Commentary
The Ghost in the Machine Q1 2024
March 19, 2024
Macroeconomics: The Day Ahead for 22 March
- March 22, 2024
- Marc Ostwald
- Follow us on Twitter @ADMISI_Ltd
- Digesting UK Consumer Confidence and Retail Sales, German Import and House Prices, awaiting Ifo Business Climate, UK CBI Industrial Trends, Canada Retail Sales and Mexico CPI; very busy run of Fed and ECB speakers; rate decisions in Colombia and Russia
- U.K.: slightly better than expected Retail Sales, mixed Consumer Confidence in essence a case of more of the same, cost of living pressures remain
- Germany: PMIs hint at downside risks to Ifo Business Climate, but month-on-month divergence quite frequent
EVENTS PREVIEW
The week ends on a quieter note in terms of data and events, but there are Japan’s national CPI, UK Gfk Consumer Confidence and German Import Prices to digest, while ahead lie Germany’s Ifo Business Climate and UK CBI Industrial Trends surveys, along with Mexico’s mid-month CPI and Canadian Retail Sales. Fed and ECB speakers will be out in force, while there are rate decisions in Russia (no change 16.0%) and Colombia (50 bps cut to 12.25%). Next week’s schedule of data and events is rather minimalist in the run-up to the Easter holiday break. Germany’s Ifo survey will be of particular interest today given the unexpected slide in yesterday’s Manufacturing PMI, with a modest improvement expected in expectations, but little change in current assessment.
** U.K. – Retail Sales / GfK Consumer Confidence **
At flat m/m headline and up 0.2% m/m, Retail Sales were a little better than expected, even accounting for the small downward revision to January, but the underlying trend after all the volatility of recent months is still sluggish, even if February’s wet weather likely acted as a drag. The modest setback in Consumer Confidence to -21 from -19 was primarily a function of a dip in views on the economic outlook and the climate for major purchases, offset by a slight improvement in the assessment of Personal Finances. As noted in yesterday’s central bank ‘state of play’ review, and underlined by Bailey’s FT comments, an initial rate cut in June appears increasingly likely.
In terms of the rest of the overnight news, Japan’s national CPI was both largely in line with Tokyo CPI and forecasts, driven higher by base effects from last year’s energy and travel subsidies, rather than suggesting stickier’ inflation. The record 8.3% y/y 2023 fall in German residential property prices is of greater significance than the slightly higher than expected Import Prices, underlining just how hard higher ECB rates have hit the sector, and with most banks not expecting any respite in 2024, even if the ECB cuts rates.
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