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Included this week:

  • Central Bank Rate Decisions
    • Flash Estimate HICP
  • IMF Economic Outlook
    • Flash Estimate GDP
  • Unemployment
  • Vacant Dwellings - ESB Connections

Central Banks

The FED, ECB & BOE all met this week. The Fed raised 25 bps, the markets reacted positively to this news with sentiment forecasting a pause in rate hikes is on the horizon. The ECB raised by 50 bps as expected, Lagarde gave guidance for a further 50 bps in March. Having previously abandoned “forward guidance”. The BOE also raised rates by 50 bps, Governor Bailey signalled that the UK “… seen the first signs that inflation has turned the corner. But it’s too soon to declare victory just yet.”

Note that the effective date for the ECB rate hike is February 8th, bringing the rate to 2.5%. The chart below represents data to date, thus does not show the latest 50bps announced hike.



For context, see latest inflation figures below.

HICP

Data for Germany for January 2023 were not available in time for publication due to technical data processing issues in Germany. Therefore, the euro area HICP has been calculated using Eurostat estimates for Germany.

Headline inflation falls again, Core inflation has yet to decrease on latest flash estimate. See below for more detail on HICP.

Headline inflation falls again, Core inflation has yet to decrease on latest flash estimate. See below for more detail on HICP.


The left panel shows the Euro Area HICP. The panel on the right show a line chart of the monthly movement and the 1 and 2 standard deviations above and below zero for the entire series which dates back to 1997.

The left panel shows the Euro Area HICP. The panel on the right show a line chart of the monthly movement and the 1 and 2 standard deviations above and below zero for the entire series which dates back to 1997.



UK & US CPI

Comparing apples with apples is not as straight forward with the UK & US. Slight variations in methodology between the statistical houses and time lags need to be considered along with data revisions.

OECD

Data accessed through FRED for: OECD, “Main Economic Indicators - complete database”. The lags are the obvious problem here.

The standard deviation bands are wider for the UK given their poor record with inflation in the 70s, 80s and early 90s. Since the BOE has been independence in 1997.

The standard deviation bands are wider for the UK given their poor record with inflation in the 70s, 80s and early 90s. Since the BOE has been independence in 1997.


The latest data from the Office of National Sataistics in the UK & nearest comparable from Fred shows the latest data print for the UK and US respectively.

The latest data from the Office of National Sataistics in the UK & nearest comparable from Fred shows the latest data print for the UK and US respectively.

IMF Economic Outlook

“Inflation Peaking amid Low Growth” - World Economic Outlook, January 2023

Findings in summary:

  • Global growth is projected to fall from an estimated 3.4 percent in 2022 to 2.9 percent in 2023, then rise to 3.1 percent in 2024.
  • The balance of risks remains tilted to the downside, but adverse risks have moderated since the October 2022 World Economic Outlook.
  • In most economies, amid the cost-of-living crisis, the priority remains achieving sustained disinflation.

I’ve taken a subset of the selected countries which the IMF reported data on, Ireland was not included.

The only country from the subset to show real term declines in 2022, The UK is projected to be the worst performing nation in 2023, and the only to show a decline. - With Russia back to growth.

The only country from the subset to show real term declines in 2022, The UK is projected to be the worst performing nation in 2023, and the only to show a decline. - With Russia back to growth.

GDP

GDP up by 0.1% in the euro area and stable in the EU - Eurostat flash estimate, Q4 2022.

+1.9% and +1.8% respectively compared with the fourth quarter of 2021

European GDP has proven more resilient than forecasts predicted last year. A strong economy in my view increases the likelihood of rate hikes, particularly due to core inflation at current levels as we have seen previously.

The IMF reports data on Market-implied Expectations citing data from Bloomberg. Cuts expected earlier and deeper, stabilizing just under 3 for FED and just north of 2 for the ECB from a peak of 5% and approx. 3.35% respectively. I am skeptical, I believe will pause before cutting and that we are less likely to see rate cuts this year than the market is predicting.


Unemployment

Headline


Live Register

A negative value indicates a decrease in the number of people on the live register. The closer the value to zero indicates that it is decreasing at a slower rate, as is the case generally above.

A negative value indicates a decrease in the number of people on the live register. The closer the value to zero indicates that it is decreasing at a slower rate, as is the case generally above.


Vacant Dwellings

“Dwellings were considered to be vacant where - for an individual quarter - they had less than 180kwh of consumption recorded in data provided by ESB Networks, for at least four consecutive quarters (for the reference quarter and at least three consecutive prior quarters).” - CSO Methodology

As we would expect the west coast has a higher volume of vacant dwellings with the GDAs and the cities having the lowest. LEAs with more development will have a lower rate

As we would expect the west coast has a higher volume of vacant dwellings with the GDAs and the cities having the lowest. LEAs with more development will have a lower rate


Note that the scale has changed from the previous map. Suburban Dublin and the most immediate of GDA have the lowest vacancy. The relatively higher vacancy rate in Dublin city center is interesting. The CSO vacancy data is also broken down into Electoral Divisions which may be worth analysing to better understand the variance.

Note that the scale has changed from the previous map. Suburban Dublin and the most immediate of GDA have the lowest vacancy. The relatively higher vacancy rate in Dublin city center is interesting. The CSO vacancy data is also broken down into Electoral Divisions which may be worth analysing to better understand the variance.