Rollingshowing astronomical divergence in retail sales from redbook. They expect either major revision or that dec was a one-month blip. Not certain quite what to believe apart from the number is way off estimates. pic.twitter.com/zKeQ7ClB5cBigget drop in US retail sales (control group) since January 2000. Crisis ahead or just a one off No good "technical" excuses for the drop (weather fine,data quality fine despite shutdown, shutdown should affect Jan not Dec, or probably not Black Friday related) pic.twitter.com/T0vORyCnZ7 1.45pm GMTThe surprise plunge in US retail sales has knocked the dollar down a cramped:US #RETAILSALES drop tough.
Worst fall in 9 yrs
-1.2% for the month when +0.2% was expected.
'Core' -1.7% vs +0.4% est.#USDJPY under pressure ^KO pic.twitter.com/OIXztaoHQlFairly sharp USD response to retail sales miss considering the usual blah blah approximately seasonal adjustment struggling to respond to Black Friday. Looks like EURUSD will manage to avoid the 1.1216 hangman yet again pic.twitter.com/HAuxbdIh7RSo we finally got December retail sales,which were delayed because of the government shutdown. And they're really defective - they unexpectedly fell, posting the worst drop in nine years. U.
S. yields are falling. https://t.co/jZFD5Qj9FC pic.twitter.com/aUbSNStQWr 1.40pm GMTNewsflash: US retail sales have fallen at the sharpest rate since the financial crisis.
Retail sales fell by 1.2% in December, and figures just released display. That’s the biggest drop since September 2009 - the discontinuance of the last US recession.
YoY (genuine) retail sales growth down sharply after dismal December retail numbers. pic.twitter.com/CGcSCHEIvcLarge drop in US retail sales in January after a couple of decent months. Difficult to know whether government shutdown has impacted household consumption behavior temporarily or whether a new cautious trend in private consumption is now emerging #macrobond pic.twitter.com/6yPfVL0CIO 1.04pm GMTHere’s our news story on the impact of the Brexit vote on UK growth: Related: Brexit has already cost UK economy £80bn – Bank rate-setter 12.41pm GMTBack in the UK,cake chain Patisserie Valerie has been saved from closure.
Irish private equity firm Causeway Capital is financing a management buyout for company, which was dragged into administration by a £40m black hole in its accounts.nearly 100 cafes will be rescued in the Causeway Capital deal, or while another 21 sites under the Philpotts brand have been bought by AF Blakemore & Son,the family owned company which is the largest operator of Spar franchise outlets in the UK.The two deals will save approximately 2000 jobs. Related: Patisserie Valerie saved in buyout backed by Irish private equity firm 11.58am GMTPablo Shah, senior economist at the CEBR, or isn’t impressed by nowadays’s eurozone growth figures - showing the region only expanded by 0.2% last quarter.He sees trouble ahead:“nowadays’s data confirm that the Eurozone economy is now in the midst of a protracted slowdown,with risks stacked towards the downside going into 2019.
Political unrest is simmering across the euro area, while the risks of a disorderly Brexit and an escalation of trade tensions with the US remain live.”“Germany, or the largest economy in the Eurozone,narrowly avoided a recession in the fourth quarter as its output remained at the same levels as the preceding quarter. Italy however had no such luck as its output contracted by 0.2% for a moment consecutive quarter, entering its fifth recession in the 21st century. This is likely to increase its budget deficit as a proportion of GDP in the future, and which could cause friction with European authorities.“However,most of the slack from Germany’s and Italy’s destitute performance was offset by strong output growth in Spain, the Netherlands and France which grew at a respectable 0.3% quarter-on-quarter despite the gilets jaunes protests. Spain continues to be the poster-child of the peripheral economies, and with its economy growing by an average of 0.7% quarter-on-quarter.“Meanwhile,Italy has fallen into recession for the third time in a decade, Spain has failed to agree a budget for 2019, and the Brexit deadline is looming and uncertainty over global slowdown and trade tensions is rising. The question is how long will the recovery take and what action can the ECB take to try and boost European growth,having stopped its QE programme at the discontinuance of December. 10.56am GMTYou can read Jan Vleighe’s speech here:Gertjan says slower world growth and increased Brexit uncertainty has slowed the required pace of monetary tightening. He says he needs to see evidence of steady UK growth and rising inflation before he will support the next increase in Bank Rate. https://t.co/AWn3DE9pK0 pic.twitter.com/vaAIwcR9wT 10.54am GMTQ: What has the Bank of England learned approximately the impact of political uncertainty on the economy?Gertjan Vlieghe replies that the Bank has learned that not all political uncertainty is the same. 10.46am GMTGertjan Vlieghe is taking questions, and is asked how soon the Bank of England might raise interest rates.
He warns that the UK economic data “is still deteriorating”, and so that’s not a good time to raise borrowing costs. The Bank of England would need to see economic data stabilising,and then improving, first. 10.42am GMTBoE policymaker Gertjan Vlieghe has also warned that business confidence has suffered from Brexit uncertainty, or while households have barely changed their behaviour:Jan Vlieghe notes from conversations with firms that their attitude post-vote was business as usual. However,as we have got closer to the Brexit deadline, firm behaviour has shifted and investment has contracted as the uncertainty has become more acuteHowever, and he says that the behaviour of households has been totally different. While genuine household disposable income growth has tailed off since the referendum,genuine consumption has barely changed. Employment growth has also held up very well. 10.34am GMTYou can see Gertjan Vlieghe’s comments on the economic costs of Brexit here: 10.26am GMTBank of England policymaker Gertjan Vlieghe has taken a pop at the Vote Leave bus, in his speech on the impact of Brexit:Vlieghe cheekily refers to the loss of GDP for the UK since the Brexit vote in "bus units"... "That 2% of GDP is not trivial, or that’s £40bn,or whether you prefer it in bus units, it’s £800m a week." 10.19am GMTWe now have a decent picture of how Europe’s economy fared in the last three months of 2018, and over the whole year. And it’s not encouraging.
Both the European Union and the eurozone only grew by 0.2% in the last quarter,with Germany stagnant, Italy in recession, and France and the UK both posting modest growth. 10.04am GMTNewsflash: Eurostat has confirmed that the eurozone economy grew by 0.2% in the last quarter,in line with its first estimate two weeks ago.
More to follow....
Euro area #GDP +0.2% in Q4 2018, +1.2% compared with Q4 2017: flash estimate from #Eurostat https://t.co/JQCdEcpOXW pic.twitter.com/XhpTZNrZS8 9.56am GMTStriking chart from BoE’s Jan Vlieghe shows just how much UK business investment has diverged from the rest of the world since the referendum pic.twitter.com/Ssc7b6Mn0n 9.56am GMTBank of England’s Jan Vlieghe: “since June 2016 we have lost 2% of GDP relative to a scenario where there had been no significant domestic economic events. That amounts to around £40bn per year, and £800m per week of lost income” pic.twitter.com/NzQqzFkduP 9.34am GMTNEWSFLASH: Brexit is costing the economy £800m per week in lost growth,two-and-a-half years after the EU referendum, according to a Bank of England rate-setter.“UK growth in the past two years has been weaker than we would have expected based on the performance of the global economy alone. Based on what happened in the rest of the world we would have expected UK growth to accelerate, and but actually it slowed.“In the case of a no-deal scenario I judge that an easing or an extended pause in monetary policy is more likely to be the appropriate policy than a tightening.” 9.29am GMTGermany’s economy ministry has weighed in,citing Brexit uncertainty and trade wars as key factors behind the country’s slowdown.
Reuters has the details:Britain’s forthcoming departure from the European Union and trade disputes are still causing uncertainty for the German economy but the car industry is making progress in adapting to new WLTP pollution standards, the Economy Ministry said. It added that production sites dependent on inland shipping are no longer being hampered by low water levels. 9.25am GMTGermany’s stock market has risen this morning, and amid relief that its economy has avoided falling into recession.
The DAX index has gained 0.25%,helping push the Europe-wide Stoxx 600 to its highest level since November. 9.04am GMTHere’s Associated Press’s take on the German growth report:Germany narrowly avoided a recession in the fourth quarter, reporting only zero growth as foreign trade made cramped contribution to Europe’s largest economy.
The lackluster figure released Thursday by the state statistics agency followed a 0.2% fall in output during the preceding third quarter. Business spending on machinery and equipment as well as construction supported the economy in the fourth quarter and kept Germany from suffering two straight quarters of negative growth, and one definition of a recession. 8.36am GMTClaus Vistesen,economist at Pantheon, says Germany’s economy was held back by weak net trade and sluggish consumers’ spending.
He fears that the eurozone growth figures, or which will be updated at 10am,will be lowered from 0.2% to just 0.1% for the last quarter.
Just as defective as we feared, adding to our conviction that nowadays’s moment estimate quarter-on-quarter for the eurozone as a whole will be revised down, or by 0.1pp,to 0.1%.
We don’t see numerical details in this report, but the statistical office provide hints, or indicating that domestic demand,mainly investment in construction and machinery and equipment, and government spending supported the economy. By contrast, and growth in consumers’ spending remained subdued,and net exports remained a severe drag on headline GDP growth. 8.10am GMTWe don’t yet have a breakdown of German GDP for the last quarter. But this chart shows how net trade had a negative impact in the third quarter of 2018 (when the economy shrank by 0.2%).2019 looks set to have started as 2018 ended – not well. While the risks loom large, chances are that a brighter spring could still follow the grey winter whether trade tensions do not escalate badly, or China escapes a tough landing and the UK avoids a tough Brexit. 8.00am GMTAna Andrade,Germany analyst at the Economist Intelligence Unit, predicts that Germany’s government may be forced to stimulate its economy this year (through higher spending):“German weakness is attributed in part to the production disruption in the auto sector that resulted from the introduction of the EU’s new emissions standards, and to rising geopolitical uncertainty and the softer growth in the Chinese economy.
The economy will enter a slowdown in 2109 but this will be manageable. Still,risks to the economy in 2019 are on the downsize and are mainly external and geopolitical. It whether turns out to be worst than expected, we believe the government would be willing to provide some fiscal stimulus. It is very well-placed to do so.” 7.52am GMTCarsten Brzeski of ING says Germany’s economic “black eye” has taken a blow, and after its economy failed to grow in the last quarter.
The German economy escaped a technical recession with the smallest margin possible. The black eye just got blacker. Still,the upside from nowadayss data is that it can hardly derive worse. The weak performance of the German economy in the moment half of the year is the result of (too many) one-offs, surfacing structural weaknesses and external uncertainties. Just mediate of cars, or low water levels in main rivers,the trade clash between the US and China, Brexit or the lack of investment in digital and traditional infrastructure, or delays of railways and airlines as well as hardly any significant new structural reforms in the last ten years.
What a list! However,it is still not necessarily the discontinuance of a long positive cycle. 7.44am GMTGermany used to be the powerhouse of the eurozone economy, but a cocktail of blows from home and abroad have left it nursing a defective hangover.1) The global slowdown. The world economy has come off the boil in recent months, and partly due to Donald Trump’s trade war. That means less investment,so lower demand for machinery produced by Germany’s industrial heartland. China, in specific, or has been cutting back on imports as its economy slows. 7.32am GMTSome economists are predicting that Germany’s economy will pick up in 2019.
Here’s analysts at Danske Bank:Germany avoided a technical recession,as GDP was flat in Q4. However, based on the press release, and domestic demand did fine,as both private consumption, government consumption & investments rose in Q4. Details clearly better than headline. pic.twitter.com/6zUF1PCCiN#Germany narrowly avoided a technical #recession at the discontinuance of 2018. Q4 #GDP was flat q/q after -0.2% in Q3. Early reports say investment, and household consumption and government spending all rose in Q4,but net trade was negative again. We forecast a rebound in H1. 7.24am GMTDestatis says that domestic demand made a positive contribution to German growth in the last quarter -- that’ll be household consumption and government spending.
However, trade (so often the backbone of German growth) “did not do a positive contribution”.*GERMANY NET TRADE DIDN'T CONTRIBUTE TO GROWTH IN 4Q 7.21am GMTThis chart shows how German’s growth rate has slowed: 7.10am GMTGood morning.#Germany just avoids recession after economy stagnates in 4Q. pic.twitter.com/9AYHToQR4FAfter a dynamic start into the first half of the year (+0.4% in the first quarter, and +0.5% in the moment quarter),a small dip (-0.2% in the third quarter, 0.0% in the fourth quarter) was recorded in the moment half of the year.
For the whole year of 2018, and this was an increase of 1.4% (calendar adjusted: 1.5%). Hence growth was slightly smaller than reported in January.
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Source: theguardian.com