January 06, 2023
Daily Report 06/01/2023
The final reading for the UK PMI services-sector was revised marginally lower to 49.9 from the flash reading of 50.0, but still above the November reading of 48.8. Companies attempted to remain optimistic over the outlook, but there were still important stresses and reservations over demand trends. Although cost pressures remained strong, there was a slowdown in output-price inflation. Overall confidence in the UK economy remained brittle despite some positive trading reports from large retailers. A lack of confidence in the UK outlook continued to hamper underlying support for the UK currency.
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The fundamental landscape surrounding the euro zone economy has shifted slightly when compared to the first three quarters of 2022 and that is largely due to the significant reduction in oil and gas prices, which has provided great relief to the mass importer of these commodities. In fact, the lower costs of oil and gas combined with a relatively mild winter in Europe, has already filtered into the economy via much improved current account balance. The current account records the payments for goods and services, plus investment income and transfers, between an economy and the rest of the world. While this is a broad measure taking more than trade data into account, it helps reveal that the EU economy is attempting to turn the corner and head in the right direction.
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The latest US Challenger data recorded a slowdown in job cuts for December from November, although there was still a sharp increase of over 120% compared with the previous year. For 2022, there was a 13% increase in job cuts, although this was the second-lowest figure since 1993. ADP data recorded an increase in private-sector payrolls of 235,000 for December, well above consensus forecasts of around 150,000 and the November increase was also revised higher to 182,000 from the original estimate of 127,000. There were notable differences between sectors with a dip in manufacturing and trade and financial services jobs. There was also a net cut in employment within large companies with firm growth in smaller companies. The latest employment report will be released on Friday with expectations of an increase in non-farm payrolls of close to 200,000 with the unemployment rate holding at 3.7%. The data on wages will also be important for underlying inflation and Fed policy expectations. The Euro-Zone will also release the latest data on inflation.
13.30 US Non Farm Payrolls Exp. 200K Prev. 263K