Industrial Producer Prices In The Euro Area

Summary:

July 2024 compared with June 2024，Industrial producer prices up by 0.8% in both the euro area and the EU.Down by 2.1% in the euro area and by 1.9% in the EU compared with July 2023.

Overview

In July 2024, compared with June 2024, industrial producer prices increased by 0.8% in both the euro area and the EU, according to first estimates from Eurostat, the statistical office of the European Union. In June 2024, industrial producer prices grew by 0.6% in both the euro area and the EU.

In July 2024, compared with July 2023, industrial producer prices decreased by 2.1% the euro area and by 1.9% in the EU.

Monthly comparison by main industrial grouping and by Member State

In the euro area in July 2024, compared with June 2024, industrial producer prices decreased by 0.1% for intermediate goods;increased by 2.8% for energy;remained stable for capital goods;decreased by 0.1% for durable consumer goods;decreased by 0.1% for non-durable consumer goods.

Prices in total industry excluding energy decreased by 0.1%.

In the EU, industrial producer prices remained stable for intermediate goods;increased by 2.5% for energy;remained stable for capital goods;decreased by 0.1% for durable consumer goods;remained stable for non-durable consumer goods.

Prices in total industry excluding energy decreased by 0.1%.

The highest monthly increases in industrial producer prices were recorded in Bulgaria (+3.6%), Greece (+2.9%) and Romania (+2.7%). The highest decreases were observed in Sweden (-0.9%), Finland (-0.7%) and Austria (-0.2%).

Annual comparison by main industrial grouping and by Member State

In the euro area in July 2024, compared with July 2023, industrial producer prices decreased by 1.2% for intermediate goods;decreased by 6.9% for energy;increased by 1.4% for capital goods;increased by 0.3% for durable consumer goods;increased by 1.0% for non-durable consumer goods.Prices in total industry excluding energy increased by 0.2%.

In the EU, industrial producer prices decreased by 1.2% for intermediate goods;decreased by 5.9% for energy;increased by 1.5% for capital goods;increased by 0.2% for durable consumer goods;increased by 0.9% for non-durable consumer goods.Prices in total industry excluding energy increased by 0.2%.

The largest annual decreases in industrial producer prices were recorded in Slovakia (-18.9%), Luxembourg (-6.7%) and Latvia (-6.0%). The highest increases were observed in Ireland (+6.1%), Romania (+2.7%) and Portugal (+2.0%).

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Warren Takunda

Economic

America’s employers posted fewer job openings in July than they had the previous month, a sign that hiring could further cool in the coming months.

The Labor Department reported Wednesday that there were 7.7 million open jobs in July, down from 7.9 million in June and the fewest since January 2021. Openings have fallen steadily this year, from nearly 8.8 million in January.

Layoffs rose from 1.56 million to 1.76 million, the most since March 2023, though that level of job cuts is roughly consistent with pre-pandemic levels, when the unemployment rate was historically low. Layoffs have been unusually low since the economy’s rapid recovery from the pandemic recession, with many employers intent on holding onto their workers.

Overall, Wednesday’s report painted a mixed picture of the job market. On the positive side, total hiring rose in July, to 5.5 million, after it had fallen to a four-year low of 5.2 million in June. And the number of people who quit their jobs ticked up slightly, to about 3.3 million. The number of quits is seen as a measure of the job market’s health: Workers typically quit when they already have a new job or when they’re confident they can find one.

Still, quits remain far below the peak of 4.5 million reached in 2022, when many workers shifted jobs as the economy accelerated out of the pandemic recession. The spike in quits at that time helped drive up wage gains as companies jacked up pay to try to find or keep employees. The current lower level of quits suggests that wage increases will likely remain modest, which should help further cool inflation.

Stephen Stanley, an economist at Santander, noted that July’s job openings are still about 7% above 2019 levels, when hiring was healthy.

“Labor demand is still solid, albeit moderating,” he said.

Wednesday’s figures indicate that fewer companies are seeking to add workers despite recent data showing that consumer spending is still growing. Last week, the government estimated that the economy expanded at a healthy 3% annual rate in the April-June quarter.

In July, job openings fell sharply in health care and state and local government and also dropped in warehousing and transportation. Openings rose in manufacturing and professional and business services, a category that includes legal services and engineering and accounting.

Even as openings have fallen for the past two years, there are still roughly 1.1 job openings for every unemployed person, Wednesday’s report showed. That reflects the economy’s continuing need for workers and marks a reversal from before the pandemic, when there were always more unemployed people than available jobs.

The July report on job openings is the first of several measures this week of the labor market’s health that the Federal Reserve will be watching closely. If clear evidence emerges that hiring is faltering, the Fed might decide at its next meeting Sept. 17-18 to start cutting its benchmark interest rate by a relatively aggressive half-percentage point. If hiring remains mostly solid, however, a more typical quarter-point rate cut would be likelier.

On Thursday, the government will report how many laid-off workers sought unemployment benefits last week. So far, most employers are largely holding onto their workers, rather than imposing layoffs, even though they have been slower to add jobs than they were earlier this year.

On Friday, the week’s highest-profile economic report — the monthly jobs data — will be released. The consensus estimate of economists is that employers added 163,000 jobs in August and that the unemployment rate ticked down from 4.3% to 4.2%.

Last month, the government reported that job gains slowed in July to just 114,000 — far fewer than expected and that the second-smallest total in 3 1/2 years — and the unemployment rate rose for a fourth straight month.

Those figures sparked fears that the economy was seriously weakening and contributed to a plunge in stock prices. Late last month, Fed Chair Jerome Powell underscored the central bank’s increasing focus on the job market, with inflations steadily fading.

In a speech at an annual economic symposium in Jackson Hole, Wyoming, Powell said that hiring has “cooled considerably” and that the Fed does not “seek or welcome further cooling” in the job market. Economists saw those comments as evidence that the Fed may accelerate its rate cuts if it decides it is needed to offset a slowdown in hiring.

Source: AP

To stay updated on all economic events of today, please check out our Economic calendar

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Bank of Russia

Monthly Summary

Current growth of prices was persistently high between July and August, including in the underlying components of inflation. A further rise was seen in household and business inflation expectations. At the same time, there were tentative signs of an emerging disinflationary trend, with demand posting a more moderate pace. This came on the back of a slowdown in retail lending and less dynamism in household consumption. This is expected to encourage a switch to more moderate production plans and, combined with gradually increasing productivity, help soften a tight labour market.

In July, the seasonally adjusted growth of consumer prices – even excluding utility rates – was highest since the start of the year. It was driven by fruit and vegetable and petrol prices. However, considerably less growth was seen in the underlying components of inflation. While seasonally adjusted price growth declined in August, it is premature to speak of a steady reduction in inflationary pressures. To return inflation to 4% in 2025, tighter monetary conditions are needed than in 2024 H1. Whether this will require an additional increase in the key rate will depend on incoming data.

The July–August data and surveys mostly signal slower growth in economic activity, including in household consumption. Retail lending progressed at a slower pace, excluding car loans. Overall, this enables a gradual reduction in overheating in the economy and a transition to more moderate but sustainable growth, providing that price stability is achieved.

Between late July and August, developments in domestic financial markets were driven by a hostile geopolitical environment as well as an investor rethink on the timeframe of tight monetary policy. The foreign currency market grew more fragmented, with further complications in yuan-ruble pricing. Negative trends prevailed in the equity and fixed–income bond markets, while variable yield bonds and money market funds retained investor appeal.

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Alex

Commodity

Shell has alleged that LNG producer Venture Global had wrongfully earned $3.5 billion from selling cargos from long-term contracts on the spot market instead.

According to a Financial Times report, Shell had commissioned a study “to assess how much more revenue Venture Global wrongfully earned by denying certain European customers their contracted cargoes”.

Shell did not stop there, however. It went on to allege that Venture Global had caused serious LNG sourcing difficulties for one company that had to resort to sourcing the gas from five other U.S. producer, incurring additional costs of $1.5 billion, the FT report also said. The report identified Poland’s state energy company Orlen as the one most exposed to Venture Global’s tactics.

The supermajor is one of several companies suing Venture Global for failing to deliver cargos contracted under long-term agreements and instead selling the gas on the spot market, using a loophole that allows it to trade on the spot market before its facility is officially finalized. Venture Global has been seeking to extend the construction period for its Calcasieu Pass LNG plant.

Once the Calcasieu Pass facility is officially recognized as completed and fully operational, Venture Global would need to start servicing its long-term contracts with Shell, BP, and Spain’s Repsol.

The three supermajors, along with two other European energy companies, were foundation buyers for the Calcasieu Pass facility, meaning they provided Venture Global with the money to build the place in Louisiana in exchange for a commitment from the company to supply them with certain volumes of LNG over a long-term period.

The facility has a capacity of 10 million tons, and it started producing in early 2022—right on time for Europe, which was beginning to experience a shortage. But instead of honoring its contracts with the European buyers, Venture Global chose to sell more LNG on the spot market.

Source: OILPRICE

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Warren Takunda

Commodity

Crude oil prices fell for the second consecutive trading day amid weak economic data from both China and the US this week.

The WTI futures price dropped below $70 per barrel for the first time since December 2023, while Brent futures slumped to under $74 per barrel, a level not seen in nine months.

Both benchmark oil futures have plunged by more than 10% since their recent highs on 27 August.

Risk-aversion sentiment has also contributed to the downward pressure on the oil market, as the Nvidia-led tech selloff caused global markets to tumble on Tuesday.

Investors fled risky assets amid rising recession fears, with the CBOE Volatility Index, known as the market's fear gauge, spiking above 20 - the highest level in a month.

In late August, oil prices surged due to escalating military conflict between Iran and Israel, alongside production disruptions in Libya, which also fuelled the upsurge.

However, concerns of a wider regional war have eased as recession fears overshadowed geopolitical tensions, and a potential resolution to Libya's dispute is expected to restore its oil output.

Rising fears of a recession

Several disappointing data releases from the US have sparked concerns about deteriorating economic conditions and a weakening oil demand outlook.

The world's largest economy reported a weaker-than-expected Manufacturing Purchasing Manager Index (PMI), indicating that factory activity contracted for the fourth consecutive month in August.

On Wednesday, the JOLTS job openings data also revealed that the number of available jobs fell to its lowest level since January 2021.

The worsening economic data has significantly increased the likelihood of a deeper rate cut by the Federal Reserve next month, causing the yield on 2-year and 10-year US government bonds to briefly reverse their inversion for the second time since 2022.

Shorter-term government bond yields are more sensitive to imminent interest rate movements.

Historically, an economic recession tends to occur when the spread between the two benchmark US government bond yields returns to positive territory after an inversion.

Furthermore, China, the world's largest oil importer, reported softer-than-expected Manufacturing PMI over the weekend, indicating that factory production remained in contraction for the third straight month in August.

China's Caixin Services PMI, released on Wednesday, also came in lower than expected, suggesting the country's economic recovery continues to falter.

OPEC+ to delay output increase

OPEC+ may delay its plan to increase production in October amid plunging oil prices, according to a report by Reuters.

The organisation had previously agreed to raise production by 180,000 barrels per day as part of its plan to gradually unwind output cuts.

Ongoing production cuts could provide some support to the weakened crude market, although the news has not immediately lifted prices because of the prevailing risk-averse sentiment.

In June, OPEC and its allies agreed to extend production cuts of 3.66 million barrels per day until the end of 2025, with additional voluntary cuts of 2.2 million barrels per day continuing until September this year.

The organisation, which supplies over 37% of the world's total oil, has been reducing output since 2022, leading to a total cut of 5.86 million barrels per day, representing 5.7% of global demand.

Source: EuroNews

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Thomas

As the incoming Asean chairman in 2025, Malaysia is committed to accelerating the clean energy transition, and will work on strengthening regional cooperation and enhancing connectivity across the region’s energy systems.

By doing so, Malaysia’s Deputy Prime Minister Datuk Seri Fadillah Yusof, who is also the Minister of Energy Transition and Water Transformation, said Asean could make significant strides towards a sustainable and resilient energy future for all member states.

“Malaysia recognises that initiatives aimed at integrating our energy systems and advancing the use of renewable and low-carbon energy sources such as the Asean Power Grid and Trans-Asean Gas Pipeline will be prominent drivers for our collective energy future,” he said at the Indonesia International Sustainability Summit (ISF) on Thursday.

In his address titled “Green Industry: Advancing Low Carbon Energy Sources”, Fadillah expressed satisfaction with the region’s progress in cooperation, highlighting the Asean Plan of Action for Energy Cooperation (APAEC) as a key framework for driving the region’s low-carbon transition.

Speaking to reporters later, Fadillah highlighted Malaysia’s commitment to reducing its carbon footprint, improving energy efficiency and boosting renewable energy to create a greener industry.

Malaysia aims to raise its renewable energy capacity to at least 70% of its power generation mix, from the current 27%, by enhancing the deployment of renewable energy, leveraging natural resources, strategic location, and technological advancements.

Key focus areas include solar energy, supported by initiatives like the large-scale solar programme and net energy metering scheme, as well as hydropower projects in East Malaysia and mini-hydro developments in West Malaysia.

“Malaysia plans to invest in biomass and biogas technologies to diversify its renewable energy portfolio and promote a circular economy,” he said.

Fadillah joined several ministers from various countries at the ISF, with the theme “Towards Sustainable and Inclusive Growth”, which was officiated by Indonesian President Joko Widodo.

The forum, attended by over 8,000 participants, discussed topics such as the green economy, energy transition, biodiversity and nature conservation, sustainable living, and the blue economy.

Fadillah is expected to attend a gala dinner with approximately 500 invited guests at the National Monument area, hosted by Indonesian Vice President Maruf Amin on Thursday evening.

Source: Theedgemarkets

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Pepperstone

Stocks

Central Bank

Economic

Where We Stand –

So, yesterday. A relief rally? Not quite. Better than the day before? Most definitely!

I suppose the bulls, like me, will at least be pleased that yesterday didn’t see another brutal equity sell-off, though both the S&P and Nasdaq ending the day marginally in the red isn’t exactly enough to completely allay worries sparked by Tuesday’s chunky lurch lower. In many ways, the short-term lack of conviction to buy the dip was unsurprising, with anticipation – and nerves – ahead of Friday’s nonfarm payrolls print likely dampening conviction to a significant degree.

On that note, it should perhaps not come as a surprise that equities started the month on such shaky footing. This year, the S&P 500 has ended the first trading day of the month on 5 of 9 occasions, notching an average loss of 0.73% on those red days. That, for context, compares with the average daily performance of the index this year, which is an 0.19% daily advance.

Stats are interesting, but past performance is of course not a reliable indicator of future returns. Friday’s jobs report continues to hold the key for sentiment, and riskier assets, in the short-term, while the longer-run direction of travel remains to the upside, amid strong economic and earnings growth, coupled with the forceful ‘Fed put’ remaining in place.

Elsewhere, yesterday, we had yet another example of the UK government shooting itself in the foot from a macroeconomic point of view, with the FT reporting that the so-called ‘British ISA’ scheme, to encourage greater retail investment in the domestic equity market, would be scrapped. Quite what those in Number 10, and the Treasury, are drinking at this stage, I’m not sure – though I wouldn’t mind trying some of it!

These reports do feel like a mere taste of things to come, with the Budget still almost 2 months away, and the prospect of further ISA changes, in addition to the already-announced winter fuel allowance means testing, and potential tweaks to capital gains, and corporation, taxes remains on the table. Whether or not one believes that the £22bln fiscal ‘black hole’ is real, or a political concoction designed to blame the Conservatives for any potential negative economic developments, the downside growth risks that the continued tightening in fiscal policy will create, and downside risks to the GBP that subsequently emerge, are undeniable.

In actual fact, the ‘worst economic inheritance that any government has ever received’ – I perhaps over-egg the pudding a little – is far from the truth. Yesterday’s final August PMI figures pointed to a fairly chunky upward revision to the services gauge, which stood at 53.7 in August, its highest level since April. Still, I suppose we shouldn’t get too excited, as a steam-roller will soon be taken to this solid momentum.

As for other developments yesterday, the Bank of Canada delivered a third straight 25bp rate cut, as the sell-side had fully expected, and markets had adequately discounted in advance. The loonie was, hence, unchanged over the decision, even as Governor Macklem indicated that further cuts remain likely, so long as inflation continues to ease. The CAD OIS curve already fully discounts 25bp cuts at the remaining two meetings this year, which seem likely to be delivered, potentially leaving the CAD vulnerable to downside if curves elsewhere – such as in the US – reprice in a hawkish direction, with the 100bp of Fed cuts priced by year-end still looking too punchy.

On which note, Fed doves would’ve been further emboldened by yesterday’s JOLTS figure, with job openings in July falling to 7.673mln, well below the bottom end of the forecast range, and the lowest level since the start of 2021. Such a figure, naturally, raises the stakes for Friday's jobs report, and provides additional signs that 'bad news is bad news' at present, with participants more focused on downside growth risks, than the potential for additional policy stimulus, given the equity downside/Treasury upside seen as the data crossed news wires. The 2s10s spread also flipped back into positive territory, for just the second time this year, as the front-end outperformed in the aftermath of the figures, with 2s down about 10bp on the day, with benchmark yields slipping to the lowest since early-August.

Crude, though, was perhaps the most interesting market on the day, experiencing incredibly choppy conditions as a deluge of OPEC+ ‘sources’ stories arrived. The long and the short of said reports is that it is becoming increasingly likely that October’s planned output hike looks set to be delayed, by virtue of both recent market volatility, and the continued weak demand outlook. Isn’t it amazing how much a 5% fall in price can change OPEC’s mind?! In any case, front WTI failed to reclaim $70bbl, and remains unlikely to achieve any kind of sustainable rally, unless a significant pick-up in global demand comes to pass.

Look Ahead –

We continue to inch towards this week’s main event – Friday’s US labour market report – with a relatively quiet calendar ahead of us.

Today’s highlight stands as the August US ISM services PMI, which is seen broadly unchanged at 51.3, compared to the 51.4 print in July. After Tuesday’s downside surprise – and subsequent violent market reaction – to the equivalent manufacturing gauge, the figures will be closely watched for any further signs of economic woe, particularly with participants continuing to display a heightened sensitivity to negative data surprises, as shown by yesterday’s JOLTS figure. The employment sub-index, meanwhile, will also be parsed for any potential read-across to tomorrow’s jobs report.

Away from the ISM report, a handful of reads on the US labour market are due. Both, however, can be safely ignored – the ADP employment figure is little more than a ‘random number generator’ at this point, while neither the initial or continuing jobless claims prints coincide with the survey week for the August jobs report. Unit labour costs, in contrast, might attract some attention, though as a final revision of Q2 data, shouldn’t move the needle too much.

To stay updated on all economic events of today, please check out our Economic calendar

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