Australia’s employment grows 56.3k in Dec, showing continuous resilience

    Australia’s labor market displayed resilience in December as employment surged by 56.3k, significantly exceeding expectations of a 15.0k increase. Number of unemployed people also rose by 10.3k, contributing to a slight uptick in the unemployment rate from 3.9% to 4.0%, in line with forecasts.

    Participation rate climbed to a record high of 67.1%, up from 67.0%, reflecting an expanding labor force. Additionally, employment-to-population ratio rose by 0.1 percentage point to a new peak of 64.5%, showcasing the labor market’s capacity to absorb more workers. Monthly hours worked increased by 0.5% mom, equivalent to 10 million additional hours.

    This data supports the view that the labor market’s earlier signs of easing have stabilized in the second half of 2024. Robust employment growth, consistent levels of average hours worked, and unchanged or lower levels of labor underutilization compared to a year ago affirm the ongoing strength of the job market.

    Full Australia employment release here.

    BoJ’s Ueda reiterates rate hike debate for next week’s policy meeting

      BoJ Governor Kazuo Ueda indicated today, for the second time this week, that the central bank will “debate whether to raise interest rates” at its upcoming January 23-24 policy meeting. This marks the second time in this week that Ueda has emphasized

      Ueda’s comments come as BoJ prepares its new quarterly economic report, which will serve as the basis for its policy decision. While the Governor has not committed to a specific outcome, the repeated message signals that a rate hike is a plausible scenario, barring any significant market shocks tied to the January 20 inauguration of U.S. President-elect Donald Trump.

      Market sentiment, nevertheless, remains divided on the timing of the anticipated hike. A recent poll conducted between January 8-15 shows that 59 out of 61 economists expect BoJ to raise rates to 0.50% by the end of March. Yet, only 20 foresee the move occurring at this month’s meeting.

      Japan’s PPI holds steady at 3.8% as import prices turn positive

        Japan’s PPI held steady at 3.8% yoy in December, meeting market expectations and maintaining the previous month’s pace. Key drivers included a sharp 31.8% yoy rise in agricultural goods prices, fueled by soaring rice costs.

        Energy costs also contributed significantly, with electric power, gas, and water prices climbing 12.9% year-on-year. This uptick comes as the government phases out subsidies designed to mitigate rising utility and gasoline prices.

        Yen-based import prices turned positive, rising 1.0% yoy after three months of declines. While modest, this reversal underscores the lingering effects of Yen depreciation, which was recorded at -0.1% mom.

        Full Japan PPI release here.

        Fed’s Williams highlights uncertainty tied to fiscal, trade, and regulatory Policies

          New York Fed President John Williams said today that monetary policy remains “well-positioned” to balance Fed’s dual mandate of stable prices and maximum employment. He noted that the process of disinflation is expected to persist, though achieving the 2% target may take time, with a return to the goal likely “in the coming years.” The pace and direction of monetary policy, however, remain highly data-dependent

          Williams highlighted significant uncertainties clouding the economic outlook, including risks related to fiscal policies, trade dynamics, immigration changes, and regulatory shifts.

          Therefore, “our decisions on future monetary policy actions will continue to be based on the totality of the data, the evolution of the economic outlook, and the risks to achieving our dual mandate goals,” he added.

          Separately, Richmond Fed President Thomas Barkin commented on the December CPI report released today, acknowledging that it reinforces the narrative of inflation gradually declining toward Fed’s target. Barkin also downplayed the potential impact of rising 10-year Treasury yields on the Fed’s monetary policy stance.

           

          US CPI jumps to 2.9% in Dec, core ticks down to 3.2%

            US CPI rose by 0.4% mom in December, surpassing expectations of 0.3% mom and marking an acceleration from the prior month’s 0.3% mom increase. Meanwhile, core CPI, which excludes the more volatile food and energy components, rose by a more subdued 0.2% mom, in line with market expectations but down from the 0.3% mom recorded in November.

            Energy prices were the primary driver, rising 2.6% mom on the month and accounting for over 40% of the headline increase. Food prices also contributed to inflationary pressure, advancing by 0.3% mom.

            On an annual basis, headline inflation climbed to 2.9% yoy, meeting consensus forecasts and up from November’s 2.7% yoy. Core inflation, however, slowed to 3.2% yoy, slightly below expectations of 3.3% yoy, indicating some easing in underlying price pressures. Notably, energy prices declined by -0.5% yoy, while food prices remained elevated at 2.5% yoy.

            Full US CPI release here.

            Eurozone industrial production rises 0.2% mom in Nov, EU up 0.1% mom

              Eurozone industrial production edged up by 0.2% mom in November, falling short of 0.3% mom consensus forecast. While the overall increase suggests resilience in the industrial sector, the performance was uneven across categories. Production rose by 1.5% for durable consumer goods and 1.1% for energy, highlighting strong demand in these areas. Intermediate and capital goods also posted gains of 0.5% each, while non-durable consumer goods saw a marginal uptick of 0.1%.

              Across the broader EU, industrial production grew by just 0.1% on the month. The highest monthly increases were recorded in Belgium (+8.7%), Malta (+7.1%) and Lithuania (+4.3%). The largest decreases were observed in Ireland (-5.8%), Luxembourg (-3.9%) and Portugal (-3.4%).

              Full Eurozone industrial production release here.

              ECB’s Guindos and Villeroy affirm progress on disinflation

                ECB Vice President Luis de Guindos highlighted today that disinflation in the Eurozone is “well on track,” reinforcing optimism about the region’s progress toward price stability. While December’s inflation rose to 2.4%, Guindos noted that this increase was anticipated and aligned with ECB’s projections. Domestic inflation remains elevated, but recent easing signals have provided some relief.

                Guindos cautioned, however, that risks remain high. “The high level of uncertainty calls for prudence,” he said, referencing global trade frictions that could fragment the global economy further. He also warned about the fiscal policy challenges to weigh on borrowing costs and renewed geopolitical tensions to destabilize energy markets.

                Despite weak near-term economic outlook, Guindos expressed cautious optimism, stating, “The conditions are in place for growth to strengthen over the projection horizon, although less than was forecast in previous rounds.”

                Meanwhile, French ECB Governing Council member François Villeroy de Galhau echoed a positive sentiment, emphasizing progress against inflation.

                “We have practically won the battle against inflation,” he said, projecting that it “makes sense for interest rates to reach 2% by the summer.” However, Villeroy also highlighted risks to France’s 2025 growth forecast of 0.9%, acknowledging that while downside risks persist, a recession remains unlikely.

                UK CPI slows to 2.5% in Dec, services inflation down to 4.4%

                  UK CPI slowed from 2.6% yoy to 2.5% yoy in December, below expectation of 2.7% yoy. Core CPI slowed from 3.5% yoy to 3.2% yoy, below expectation of 3.4% yoy.

                  CPI goods annual rate rose from 0.4% yoy to 0.7% yoy, while CPI services annual rate fell from 5.0% yoy to 4.4% yoy.

                  On a monthly basis, CPI rose by 0.3% mom, below expectation of 0.4% mom.

                  Full UK CPI release here.

                  BoJ’s Ueda signals rate hike on the table next week

                    BoJ Governor Kazuo Ueda today provided further hints that the central bank may be considering a rate hike at its upcoming policy meeting.

                    Ueda noted, “We are currently analyzing data thoroughly and will compile the findings in our quarterly outlook report. Based on that, we will discuss whether to raise interest rates at next week’s policy meeting and would like to reach a decision.”

                    Ueda emphasized the significance of Japan’s wage outlook, which has recently been a key focus for policymakers. He pointed to encouraging signals from wage negotiations, which could bolster consumer spending and support BoJ’s inflation target.

                    Additionally, Ueda remarked that the economic policies of the incoming US administration, coupled with domestic wage trends, would play a pivotal role in determining the timing of any rate adjustment.

                    The governor’s remarks align closely with those of BoJ Deputy Governor Ryozo Himino, who earlier this week suggested that a rate hike was on the table.

                    ECB’s Lane expects service inflation to ease

                      ECB Chief Economist Philip Lane noted during an event today that services inflation will “come down quite a bit” in the coming months. He attributed much of the anticipated moderation to a slowdown in wage growth. Additionally, firms are reportedly experiencing reduced cost pressures, which should also contribute to easing price increases.

                      Lane highlighted the challenges of providing a definitive future path for interest rates, citing significant uncertainties in the global economic environment, including escalating trade tensions.

                      “From our point of view, saying here’s where we think the future rate path is going to be conveys a sense of certainty that we don’t feel,” Lane said, reinforcing the ECB’s cautious stance.

                      On the topic of exchange rates and their influence on prices, Lane pointed out that while movements in the euro-dollar exchange rate can impact European prices over time, the short-term relationship is less predictable. He noted that in the early stages of a significant currency shift, much of the impact is “absorbed by firms.

                      “The exchange rate, I think, over time plays a role,” Lane said. “But in terms of the month-by-month, quarter-by-quarter correlation between the exchange rate and import prices is not that stable.”

                       

                      US PPI rises 0.2% mom, 3.3% yoy in Dec, miss expectations

                        US producer prices rose modestly in December, with PPI for final demand increasing by 0.2% mom, falling short of market expectations of 0.3%. The gain was driven primarily by 0.6% mom increase in goods prices, which included a sharp 3.5% rise in energy costs.

                        In contrast, prices for services remained flat. Excluding the more volatile components of food and energy, core PPI was unchanged for the month, missing the anticipated 0.2% mom increase.

                        On an annual basis, headline PPI edged higher from 3.0% to 3.3% yoy, narrowly below the forecast of 3.4% yoy. Core PPI, excluding food and energy, rose from 3.4% to 3.5% yoy, also underwhelming expectations of 3.8% yoy.

                        Full US PPI release here.

                        BoJ’s Himino signals rate hike possible in upcoming meeting

                          In remarks today, BoJ Deputy Governor Ryozo Himino signaled that a rate hike remains a tangible possibility at the upcoming policy meeting. He said the board “will discuss whether to raise interest rates next week, base its decision on thee projections detailed in the quarterly outlook report.

                          Himino stated, “When the appropriate timing comes, we must shift policy without delay, as the effect of monetary policy is said to show up with a lag of one to one-and-a-half years.”

                          The Deputy Governor clarified that BoJ does not rely on a predefined “checklist” for rate decisions. Instead, the board intends to thoroughly analyze the economic outlook and inflation expectations to determine the next steps.

                          Australian Westpac consumer sentiment dips again, RBA easing unlikely before May

                            Australia’s Westpac Consumer Sentiment fell -0.7% mom in January, settling at 92.1, reflecting a second consecutive decline. However, Westpac noted a divergence within the data: current conditions sub-indexes weakened, while forward-looking measures were flat or showed slight gains.

                            RBA faces a mixed picture as it prepares for its next policy meeting on February 17–18. While the central bank appears increasingly confident about bringing inflation back within its 2–3% target range, labor market “stopped easing” in the latter half of 2024 and subdued consumer surveys highlighted “mixed signals”.

                            According to Westpac, RBA is likely to keep interest rates unchanged in February, with an easing cycle more probable to commence in May.

                            Full Australia Westpac consumer sentiment release here.

                            ECB’s Vujcic: Gradual rate cuts justified amid elevated uncertainty

                              Croatian ECB Governing Council member Boris Vujcic emphasized a cautious and deliberate approach to monetary policy adjustments during comments to Econostream Media.

                              Vujcic stated that any acceleration in the pace of rate cuts would require a “significant departure” from the current economic projections, which he noted were being met by ongoing developments.

                              “In circumstances where uncertainties are still elevated,” Vujcic explained, “it’s better to move gradually, and this is what we’re doing.”

                              Vujcic also highlighted the ECB’s independence from other central banks, including the Fed. “We are not dependent on the Fed or any other central bank,” he remarked.

                              His comments lent support to current market expectations for ECB’s policy path, which he described as “justified” in the near term.

                              ECB’s Rehn: Restrictive monetary policy to end latest by mid-summer

                                Finnish ECB Governing Council member Olli Rehn reaffirmed the central bank’s commitment to easing monetary policy as disinflation remains on track and the region faces a weakening growth outlook. Speaking with Bloomberg TV, Rehn stated that it “makes sense to continue rate cuts.”

                                Rehn projected that ECB is likely to exit restrictive monetary territory “sometime in the spring-winter,” a timeline he clarified could range from January to June in Finland’s seasonal context.

                                He added, “I would say at the latest by midsummer, we should have left restrictive territory.”

                                Rehn also emphasized ECB’s independence in policy decisions, distancing it from the Fed’s approach.

                                “The ECB is not the 13th federal district of the Federal Reserve System,” he noted, reinforcing that the bank’s decisions are guided solely by its mandate to maintain price stability within the Eurozone.

                                 

                                ECB’s Lane stresses the need for “middle path” on interest rates

                                  ECB Chief Economist Philip Lane, in an interview with Der Standard, highlighted that a “middle path” is essential to achieving the inflation target without stifling economic growth or allowing inflationary pressures to persist.

                                  Lane warned that if interest rates fall too quickly, it could undermine efforts to bring services inflation under control. On the other hand, keeping rates too high for too long risks that inflation could “materially fall below target”.

                                  “We think inflation pressure will continue to ease this year,” Lane stated, while adding that wage increases in 2025 are expected to moderate significantly, which could contribute to a softer inflationary environment.

                                  While acknowledging that the overall direction of monetary policy is clear, Lane underlined the complexities of striking the right balance of “being neither too aggressive nor too cautious.”

                                  Full interview of ECB’s Lane here.

                                  China’s monthly trade surplus soars to USD 104.8B as exports jumps 10.7% yoy

                                    China’s trade data for December delivered a solid performance, reflecting resilience in exports and a surprising recovery in imports.

                                    Exports surged 10.7% yoy, significantly outpacing the 7.3% yoy expected growth and accelerating from November’s 6.7%.

                                    Shipments to major markets rose sharply, with exports to the US jumping 18.9% yoy, ASEAN by 15.6% yoy, and the EU by 8.7% yoy. Some analysts highlighted that front-loading ahead of the Lunar New Year and trade policy shifts under Donald Trump’s incoming administration likely bolstered the month’s figures.

                                    Imports grew 1.0% yoy, defying expectations of a -1.5% yoy decline and marking a rebound after consecutive contractions of -3.9% yoy in November and -2.3% yoy in October. This recovery was driven in part by increased purchases of commodities like copper and iron ore, with importers potentially capitalizing on lower prices.

                                    Regionally, imports from the US rose by 2.6% yoy, while ASEAN imports grew 5.4% yoy. However, imports from the EU fell by -4.9% yoy.

                                    Trade surplus widened from USD 97.4B in November to USD 104.8B in December, surpassing expectations of USD 100B.

                                    Looking ahead, markets will closely monitor China’s upcoming GDP figures, due for release on Friday. Expectations are for fourth-quarter growth to clock in at 5.0% yoy.

                                    Canada’s employment rises 91k in Dec, unemployment rate down to 6.7%

                                      Canada’s labor market closed 2024 on a strong note, with employment soaring by 91k in December, far exceeding expectations of 24.9k. Full-time positions accounted for a significant portion of the gains, with 56k new roles added.

                                      Unemployment rate fell to 6.7%, defying expectations of an increase to 6.9%, and marked an improvement from the previous month’s 6.8%. Employment rate also increased by 0.2 percentage points to 60.8%, marking the first uptick since January 2023.

                                      Total hours worked rose 0.5% mom and were 2.1% higher than a year earlier. Meanwhile, average hourly wages grew 3.8% yoy, a deceleration from November’s 4.1% yoy.

                                      Full Canada job data release here.

                                      US NFP grows 256k, unemployment rate ticks down to 4.1%

                                        US labor market showcased its resilience in December, with non-farm payrolls surging by 256k, significantly outpacing expectations of 150k. This impressive figure also surpassed the average monthly gain of 186k for 2024.

                                        Unemployment rate edged down to 4.1%, beating forecasts of remaining steady at 4.2%. This marks the seventh consecutive month where the unemployment rate has hovered within a tight range of 4.1% to 4.2%, reflecting a steady labor market. Meanwhile, the labor force participation rate held steady at 62.5%, a level consistent with its range since late 2023.

                                        Wage growth showed a measured pace, with average hourly earnings rising by 0.3% mom, in line with market expectations. On a yearly basis, wage growth softened slightly to 3.9% from 4.0% yoy previously.

                                        Full US non-farm payrolls release here.

                                        Japan’s household spending falls for fourth month, minister flags critical economic transition

                                          Japan’s household spending declined for the fourth consecutive month in November, falling -0.4% yoy. While this was an improvement from October’s -1.3% drop and surpassed expectations of -0.8%, it still reflects ongoing consumer caution.

                                          The decline was driven by significant cuts in expenditures on home appliances and food, highlighting weak domestic demand.

                                          Spending on furniture and electric appliances plummeted by -13.8%, marking the third straight month of decline, while clothing and footwear saw a similar drop -of 13.7%, down for the second consecutive month. Food purchases also contracted slightly, falling by-0.6%.

                                          Separately, Economy Minister Ryosei Akazawa acknowledged the challenges, stating that Japan’s economy is at a “critical stage” in shifting public sentiment away from deflation and toward sustainable growth driven by higher wages and investment.