12thMarch 2024
Tuesday
On Tuesday,two major economic announcements are set to be made by Great Britain and theUnited States, events that could potentially have significant impacts on theglobal financial markets. Firstly, Great Britain is scheduled to release itslatest Claimant Count Change figures, a key indicator of employment trendswithin the country. Following closely on the same day, the United States willreveal its Consumer Price Index (CPI) figures, providing crucial insights intoinflationary trends within the world's largest economy. These back-to-backannouncements are eagerly anticipated by investors and policymakers alike, asthey could provide valuable signals about the economic health and futuremonetary policy directions in both nations.
GBP- Claimant Count Change
The ClaimantCount, updated on a monthly basis approximately 16 days after the conclusion ofeach month, is traditionally viewed as a lagging indicator. Nonetheless, itcarries substantial significance as it portrays the count of individualscurrently without employment. This metric plays a vital role in signaling theoverall economic health, given the robust connection between consumer spendingand labor market dynamics. Furthermore, unemployment continues to be a criticalfactor in influencing the decision-making of authorities responsible forshaping the nation's monetary policies.
The Office forNational Statistics (ONS) revealed that the UK's unemployment rate had droppedto 3.8% in the quarter ending in December, down from 4.2% in the previousmonth, surpassing market predictions which had anticipated a rate of 4.0%.
Further detailsfrom the report indicated that the number of jobless claims had risen by 14.1Kin January, an uptick from December's 5.5K. Employment figures for Decemberalso showed a slight adjustment, with a reported increase of 72K, closelyfollowing November's 73K rise.
Wage growth dataprovided a positive outlook, with average earnings, excluding bonuses, havingclimbed by 6.2% year-on-year in December, a slight dip from November's 6.7% butstill ahead of the anticipated 6.0% growth. Including bonuses, wage inflationsaw a 5.8% rise during the same period, maintaining a steady pace againstNovember's figures and exceeding the expected 5.6% increase. This dataunderscored the ongoing adjustments in the UK labor market, reflecting bothemployment trends and wage movements.
TL;DR
Metric
Current Value
Previous Value
Market Predictions
Comments
1 Unemployment Rate
3.8%
4.2%
4.0%
Dropped from previous month, surpassing predictions.
2 Jobless Claims Change
+14.1K
+5.5K
N/A
Rose in January, following an increase in December.
3 Employment Figures Change
+72K
+73K
N/A
Slight adjustment in December, continuing the trend.
4 Average Earnings Growth (Excluding Bonuses)
6.2%
6.7%
6.0%
Decreased from November but surpassed expectations.
5 Average Earnings Growth (Including Bonuses)
5.8%
5.8%
5.6%
Maintained steady pace, exceeding expectations.
The latesteconomic forecasts reveal an anticipated decrease in the Claimant CountChange, with predictions showing a reduction of 2,000 compared tothe previous figure, which stood at 14,100.
The upcoming ClaimantCount Change is scheduled for release on Tuesday at 7:00 AM GMT.
USD – Core CPI m/m
"CPI ExFood and Energy," also known as "Underlying CPI," represents amodified consumer price index that excludes the volatile components of food andenergy. This adjusted index offers a more stable and focused measure ofinflation, providing a clearer picture of underlying price trends.
In a significantdevelopment for the US economy, core consumer prices, which strip out thevolatile food and energy components, experienced a notable rise in January2024. The increase of 0.4% month-over-month not only accelerated from theprevious 0.3% uptick but also exceeded the anticipated 0.3% rise, marking themost substantial surge in core inflation since April 2023. This trend poses achallenge to the gradual disinflationary path the US economy has been on,lending credence to the more stringent policy advocates within the Federal OpenMarket Committee (FOMC).
The inflationarypressure was notably driven by a 0.6% increase in shelter costs, a rise fromthe 0.4% observed in December 2023, coupled with a sharp 1% rise intransportation services costs, a significant jump from the prior 0.1%.Consequently, the CPI for services, excluding energy, advanced to 0.7%, up from0.4%. In contrast, the goods sector witnessed a slowdown in inflation,highlighted by a 3.4% decrease in the CPI for used cars and trucks after aprevious 0.6% increase, along with declines in the prices of apparel andmedical care commodities.
TL;DR
Metric
January 2024 Value
December 2023 Value
Comments
1 Core Consumer Prices Month-Over-Month
+0.4%
+0.3%
Notable rise, most substantial since April 2023.
2 Shelter Cost Increase
+0.6%
+0.4%
Contributed significantly to core inflation.
3 Transportation Services Cost Increase
+1.0%
+0.1%
Sharp rise, marking a significant inflationary pressure.
4 CPI for Services (Excluding Energy)
+0.7%
+0.4%
Advanced notably, indicating increased service sector costs.
5 CPI for Used Cars and Trucks
-3.4%
+0.6%
Significant decrease, indicating a slowdown in goods sector.
6 Apparel and Medical Care Commodities
Decline
N/A
Further evidences the slowdown in goods sector inflation.
The Core CPIm/m forecast indicates a slight decrease to 0.3%, down from theprevious reading of 0.4%.
USD - CPI m/m
Consumer pricesplay a significant role in driving overall inflation. The connection betweeninflation and currency valuation is crucial because when prices rise, centralbanks often respond by increasing interest rates to fulfill their mandate ofcontrolling inflation. This adjustment involves regularly sampling andcomparing the average prices of various goods and services to previous periods.
In January 2024,the US experienced a significant inflationary push, with consumer pricesjumping by 0.3%, the most substantial monthly increase observed in the pastfour months. This escalation, up from December's 0.2% rise, surpassed analysts'expectations, which had pegged the increase at 0.2%. A major driving forcebehind this inflationary pressure was the shelter index, which soared by 0.6%during the month, contributing to over two-thirds of the total rise across allcategories.
Furthermore, thefood sector also reflected upward price movements, with a 0.4% increase in thefood index. This was evenly distributed between grocery shopping and diningout, with the indices for food at home and food away from home climbing by 0.4%and 0.5%, respectively. On the other hand, the energy sector provided somerelief, with the energy index dipping by 0.9%, largely influenced by a decreasein the gasoline index, painting a complex picture of the current inflationdynamics.
TL;DR
- US consumer prices rose by 0.3% in January 2024, exceeding expectations and marking the largest increase in four months.
- Shelter costs surged by 0.6%, driving over two-thirds of the overall inflation.
- Food prices increased by 0.4%, with both grocery and dining out costs rising similarly.
- The energy index fell by 0.9%, providing some counterbalance to inflation, primarily due to lower gasoline prices.
The latest forecast suggests a modestincrease in the CPI m/m rising to 0.4% from the previous figureof 0.3%.
USD – CPI y/y
Consumer pricefluctuations largely contribute to overall inflation. The connection betweeninflation and currency valuation is significant because when prices rise,central banks typically respond by raising interest rates to uphold their commitmentto containing inflation. This process involves regularly sampling and comparingthe average prices of diverse goods and services to those in previousassessments.
In January,consumer prices experienced a 3.1% uptick, challenging expectations for a morepronounced slowdown. Data from the Bureau of Labor Statistics, disclosed on aTuesday morning, indicated that US consumer prices in January ascended beyondforecasts. The Consumer Price Index (CPI) registered a 0.3% increase from thepreceding month and a 3.1% rise from the same month in the previous year,slightly surpassing the 0.2% month-over-month increment recorded in December.Nonetheless, this marked a deceleration from the 3.4% annual growth observed inDecember.
TL;DR
Metric
Value in January
Value in December (for comparison)
Comments
1 Month-over-Month Change
+0.3%
+0.2%
Exceeded forecasts, indicating inflationary pressures.
2 Year-over-Year Change
+3.1%
+3.4%
Slight deceleration, but still higher than expected.
The latestforecast suggests stability in the economic indicator, maintaining the previousfigure at 3.1%.
The forthcoming release of the CPI y/y, CPIm/m, and Core CPI m/m data is scheduled for Tuesday at 12:30PM GMT, providing vital insights into inflationary trends.
