In the span of a month, inflation in Germany has increased from 3.2% to 3.7%. However, there is no cause for concern. The increase in unemployment in the USA is forthcoming. Business sentiment indices for services are noticeably better than industrial ones.
Rebound in prices across the Oder
In December, prices across our western border were again rising faster. The rebound of energy raw material prices in December negatively affected the price growth index. December did indeed end with an ultimate decline, but for a large part of the month, oil reached 80 dollars a barrel. However, this was not the main problem. A year ago, the government gave a subsidy for the costs of heating homes. The current year, therefore, referred not to market prices but to prices after government intervention. Hence the significant impact of energy on the behavior of the price growth index. Therefore, knowing this specificity, analysts expected that prices would rebound upward in December, however, it is a one-off event and they do not expect its continuation. It should also be remembered that Germany uses a lot of gas for heating, and it’s now decidedly cheaper than a year ago, which mitigates the lack of mentioned subsidies this year. This rise in inflation should not influence the pace of rate cuts from the ECB.
USA Data
Data from the US labor market are starting to suggest that tomorrow we should witness an increase in the unemployment rate from 3.7% to 3.8%. This is due to fewer jobs being created in both the non-agricultural and private sectors. Theoretically, this is not yet reflected in the claims for unemployment benefits, but it should be remembered that this indicator does not cope with long-term unemployment. When someone loses the right to benefit, they fall out of these statistics. What does this cause? The USA pays very close attention to this indicator; it seems to be more crucial than in Europe. Rising unemployment brings us closer to interest rate cuts. This is due to the fact that lower interest rates mean cheaper loans, and cheaper loans should stimulate investment.
Indices for Services
Yesterday we also learned the readings of the service PMI indices. They came out better than expected in the eurozone, achieving 48.8 points against the expected 48.1 points. This is very close to the important border of 50 points, separating the predominance of positive responses from negative ones. The last result above this border was in July. Service indices are typically higher than industrial ones. For some reason, managers in this sector look more positively towards the future. Symbolically, the result in the USA was also better. 51.4 points is objectively a good result, although expectations were exceeded by just 0.1 point.
Today, on the macroeconomic data calendar, it’s worth paying attention to:
14:30 – USA – labor market situation,
14:30 – Canada – labor market situation.
Maciej Przygórzewski – Chief Analyst at InternetowyKantor.pl and Walutomat
