Inflation in the US came in largely in line with market expectations for November. Headline CPI rose by 3.1% y/y, down from 3.2% a month earlier, while the monthly pace of inflation was slightly faster than expected at just 0.1%, compared with no change a month earlier. Core inflation was inline with target at 4% while so-called “supercore” inflation, core services ex-housing, rose to 3.9% from almost 3.8% a month earlier. The CPI report for November gives credence to a slow and steady disinflation in the US but is unlikely to shift the Federal Reserve to thinking that it can easy policy any sooner. We expect no change from the FOMC when it concludes its meeting later tonight.
Labour market data from the UK gave some signs of cooling in the economy. Total payrolled employees fell in November by 13k, well under market expectations of an expansion of 5k and compared with 33k added a month earlier. At the same time, average weekly earnings in the three months to October eased to 7.2% y/y from 7.7% in the prior three-month period. The ONS alternative estimate for the unemployment rate remained at 4.2%. The pull back in wage growth may be welcome news for the Bank of England though it still remains high compared with peer economies and we expect that the BoE will keep policy unchanged at this week’s MPC meeting.
Germany’s ZEW survey of investor expectations was better than expected for December, rising to 12.8 on the headline index and up from 9.8 a month earlier. The current conditions assessment improved—though is still deeply negative—rising to -77.1 from -79.8 a month earlier. The forward looking component was the strongest since March this year and suggests that Germany’s economic slump may have hit a bottom. Inflation in Germany has slowed markedly this year, rising by just 3.2% as of November compared with nearly 9% in January-February 2023. Expectations that the ECB may also turn to an easing policy sooner rather than later are also likely helping improve investor sentiment.
Inflation in India rose to 5.55% for November, not as hot as markets had been expecting but still an acceleration for the 4.87% recorded for October. Food inflation picked up to 8.7% for November from 6.6% a month earlier while core inflation ticked lower, down to 4.1% from almost 4.3% in October. Elsewhere, India reported an 11.7% rise in industrial production for October, its strongest print all year, with solid gains across nearly all sectors.
The UAE and Australia will reportedly begin negotiating a “trade pact” in 2024 according to press reports citing Australia’s trade minister. The UAE already imports food and animal products from Australia along with alumina used in aluminium smelting.
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