Global economic data on net are coming in very near Econoday’s consensus forecasts and very near the breakeven line for the Relative Performance Index (RPI), at minus 5 overall and minus 6 when excluding prices (RPI-P).
Eurozone economic activity continues to perform much as expected despite an ongoing downside bias to the German data (RPI minus 36). The region’s RPI and RPI-P ended last week at 4 and 5 respectively. Crucially, there were no surprises in the January inflation update, probably meaning that next month is too soon for the first ECB interest rate cut of the year.
In the UK, the latest data have tended to undershoot forecasts and are reflected in sub-zero readings on both the RPI (minus 14) and RPI-P (minus 25). However, underperformance in the second half of January only offset outperformance in the first half and so cleared the way for the Bank of England to leave Bank Rate unchanged at 5.25 percent.
Recent upside and downside surprises in Swiss data have all but cancelled each other out. At 3 and minus 5 respectively, the RPI and RPI-P show overall economic activity largely matching expectations, potentially leaving the Swiss National Bank to focus more on a very strong Swiss franc.
In Japan, surprisingly soft consumer demand combined with weaker-than-expected industrial production to leave the RPI at minus 21 and the RPI-P at minus 10. This warns of some downside risk to fourth quarter GDP growth, due on February 13.
Survey data for January in China were mixed but at minus 14, both the RPI and RPI-P show economic activity in general lagging a little behind expectations. The latest readings are not deep in negative surprise territory but will do nothing to bolster a very nervous stock market.
Canada’s economy proved stronger than expected in November to lift the both RPI and RPI-P to 4. Overall economic activity is now performing much as expected but only after a run of disappointingly soft readings in January. Accordingly, a Bank of Canda rate cut is likely not very far away.
Much of last week’s data from the US — with the major exception of the much stronger-than-expected employment report — have been coming in near or just below Econoday’s consensus, reflected in the RPI which is holding near the breakeven zero line, at 2 overall and 4 when excluding inflation data. Readings near zero in this case imply no change in Federal Reserve policy.