Week Ahead - Eurozone and Us Inflation to Come under the Microscope after Rate Decisions

Central Bank

Economic

Summary:

Amid ongoing jitters about the fallout from the banking sector, inflation will fall back into the limelight next week. The flash CPI readings for the euro area as well as the PCE inflation figures out of the United States will grab most of the headlines, in an otherwise quiet week. Australia will also get inflation data, and in Japan, Tokyo prices will be watched. Hot CPI numbers could roil markets as central banks have indicated that they are not about to take their eye off the ball during these turbulent times.

Will PCE inflation further complicate the Fed’s rate path?

Hot on the heels of the FOMC meeting and the banking crisis, investors will have to digest another dose of inflation data out of America. The PCE inflation report comes out on Friday along with personal income and spending numbers. Whilst there’s been good progress in overall price pressures easing in recent months, the Fed is focusing its efforts these days on services inflation, and on that, Chair Jerome Powell’s latest assessment is that there has not been any progress when excluding housing components.

Policymakers will get the chance to take another look at February prices, this time in the form of the core PCE price index. The Fed pays a lot more attention to this particular measure of inflation so any upside surprises could boost bets of a follow-up 25-basis-point rate hike in May, which at the moment, the odds are constantly swinging above and below 50%.

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The strength of the consumer will be in focus too, with the Conference Board’s closely watched consumer confidence gauge out on Tuesday and the personal consumption print due Friday. The former is more forward looking so any deterioration in the March figure might be associated with the blow up of regional banks.

In other data, housing indicators from S&P Corelogic Case-Shiller Index (Tuesday) and pending home sales (Wednesday) will be important amid signs that the sector is rebounding after falling off a cliff last year when the Fed’s tightening campaign went into overdrive. The final estimate of Q4 GDP is due Thursday, and finally, the Chicago PMI will round up Friday’s releases.

With market sentiment still quite fragile in the aftermath of the bank collapses, investors are more likely to react negatively to strong data as they would give the Fed less reason to be cautious. However, this may not necessarily lift the US dollar much, as even in the most bullish scenario, the Fed’s terminal rate has permanently shifted lower.

Eurozone inflation expected to edge down again

The European Central Bank may have dropped its forward guidance in March, but since that meeting, policymakers have been eager to signal that further rate increases are nevertheless likely in the coming months as inflation remains far above their 2% target. Headline inflation could ease below 8% when the flash estimates for March are published on Friday. However, the bigger headache for the ECB is the continued climb in the underlying measures of inflation.

When excluding food, energy, alcohol and energy, the consumer price index is forecast to creep up to 5.8% in March from 5.6% in February.

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The longer this trend continues, the greater the odds that the ECB will remain on a tightening path and the possibility of that happening whilst the Fed goes on pause is buoying the euro. Having consolidated over the last couple of months, the euro has a good chance of surpassing its February 2 peak of $1.1033 as long as the impact from the banking crisis on the Eurozone economy remains contained.

It’s a different matter in the US, however, where there is a heightened risk of a credit squeeze even if there aren’t any fresh casualties from the fallout of Silicon Valley Bank’s collapse. Powell himself has highlighted the danger that credit conditions are likely to tighten regardless of whether there are further rate increases, as banks turn more cautious and hand out fewer risky loans.

That’s not to say, though, that the European economies won’t feel any aftershocks and investors will be on alert for any dip in business confidence. The March surveys will kick off on Monday with Germany’s Ifo business climate index, followed by the Eurozone economic sentiment indicator on Thursday.

Aussie eyes CPI data as RBA pause hangs in the balance

The Reserve Bank of Australia started its debate about pausing long before the banking turmoil and will probably be even more inclined to do so at its April meeting. Markets have currently priced in about 90% probability of a pause and inflation figures due on Wednesday could push those bets closer to 100% if they unexpectedly decline further.

The RBA is hoping that inflation peaked in December when it hit 8.4% before sharply dropping to 7.4% in February. Another fall in March would be seen as sealing the deal for an April pause, although such an outcome would not bode well for the Australian dollar.

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Alternatively, stronger-than-expected CPI readings would be positive for the aussie, and there could be some upside too from manufacturing PMIs out of China on Friday should they point to a further rebound in the economy in March.

Japan’s inflation picture still unclear

Sticking to the Asia-pacific region, it’s a data heavy week in Japan, with the flurry primarily taking place on Friday. Preliminary industrial production stats, retail sales and the jobless rate, all for February, are on the agenda. But of most interest to investors will likely be the March CPI prints for the Tokyo region, which are seen as a precursor for the nationwide numbers published much later.

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Japan’s inflation rate eased back sharply in February, taking the pressure off the Bank of Japan to further scale back its stimulus policies. The March forecast is that core CPI in Tokyo continued to moderate slightly. The yen, which has been on a roll lately against its US counterpart, might struggle to extend its gains if the forecasts are met.

However, in the event that inflation reverses higher again, this could intensify speculation of some sort of policy action by the BoJ at its April meeting, as it would come on the back of the Spring wage negotiations where labour unions agreed to an inflationary pay deal that averages at 3.8% y/y.

Source:XM

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Cohen

Clean-burning hydrogen has been hyped as a potential solution to a swath of climate-related energy problems, from fuelling trucks and powering industry to generating electricity - all while emitting only puffs of harmless vapour.

The fuel is getting backing from an array of influential stakeholders, including fossil fuel firms which hope to avoid future stranded oil and gas assets by switching to the production, distribution and storage of hydrogen instead.

But for such a bright future to become reality, there needs to be a rapid and widespread surge in hydrogen demand that will justify a concurrent jump up in hydrogen production - ideally from renewable energy sources so that the fuel's only climate footprint is water.

Very little green hydrogen, or hydrogen produced from green energy sources, exists today, as most current hydrogen is made using natural gas, and known as blue hydrogen.

But several firms have committed to scaling up green hydrogen output over the coming decade, using solar or wind energy to power electrolysers that will split water into its constituent parts, hydrogen and oxygen.

How Realistic is a Hydrogen-Powered Economy?_1

The prevailing hope is that the ongoing acceleration in renewable energy development will trigger a surge in renewable energy supplies and a sharp drop in the cost of power produced from green sources.

In turn, that should drive the cost of renewable-powered electrolysis below that of other forms of hydrogen production, and allow for a rapid global surge in green hydrogen output.

Feasible Future

While industry analysts can see a viable path to greater hydrogen supply, it is less clear how the demand side pans out.

Hydrogen can theoretically be used for a variety of purposes, but it is difficult to assess the most likely major applications decades from now, even if we can assume steadily declining prices.

Further complicating the picture is that many firms which are considered as viable potential users of green hydrogen currently use very little or none of it, and will need several years and hefty budgets to retool power systems to run effectively off hydrogen.

How Realistic is a Hydrogen-Powered Economy?_2

Currently, more than 90% of the world's hydrogen is used for just three industrial applications: to lower sulphur content in diesel by refiners; to produce methanol used by fuel blenders; and to make ammonia for fertilizers and chemicals.

However, risk assurance firm DNV has taken a stab at laying out where growth is likely by geography and industry through 2050, and highlighted 15 likely usage cases come mid-century.

Industrial Heat

Currently accounting for less than 1% of global hydrogen consumption, the deployment of hydrogen as a direct heating source for industry will be the largest single usage case for hydrogen by 2050, DNV data shows.

Industrial heating will account for nearly 80 million tonnes of the roughly 341 million tonnes used globally in 2050, mainly in China and the Indian subcontinent, followed by Europe, the Middle East and North America.

How Realistic is a Hydrogen-Powered Economy?_3

As China and India look set to remain major global manufacturing hubs for decades, it makes sense that their industries will be big users of power fuels, and seek ways to reduce emissions.

However, a key challenge in those countries will be how to economically install the plumbing needed to connect industrial burners with hydrogen suppliers.

In Europe and the United States, extensive existing natural gas pipelines can be easily converted to hydrogen carriers, allowing businesses to switch over from gas to hydrogen once market conditions dictate.

Many industry and factories across Asia and elsewhere, however, run off their own coal boilers and lack a network of connecting pipelines that can potentially feed them hydrogen in a cheap and safe manner.

China and India plan to increase pipeline connectivity in the coming years, but given the prioritisation of developing renewable power over fossil fuels are unlikely to match the scale of pipeline connectivity in Europe where a vast majority of heavy industry and large manufacturers have direct pipelined gas.

Without pipelines, industries in Asia and elsewhere looking to use hydrogen may need to rely on more piecemeal delivery systems such as truck fleets, which will be more costly than wholesale pipeline systems and may slow the uptake of hydrogen as a primary fuel source.

Going Direct

Large refineries, chemical producers, smelters and fuel blending operations may have an easier time in tapping hydrogen than smaller industrial plants and factories, and look set to account for roughly half of global hydrogen use by 2050, DNV data shows.

Such businesses are more likely to receive government support for energy system overhauls than factories due to their importance to the local and international economy.

Operations like refineries and smelters also tend to be located on large and remote land parcels that can be more easily connected to pipeline systems than more numerous but more dispersed factories.

Office and residential buildings that are already connected to gas systems can also easily convert from gas to hydrogen for heating and power, and look set to account for around 6% of global use by 2050.

The aviation and rail systems are also expected to become notable users of hydrogen once prices become more attractive and industrial knowledge about handling and storage of the fuel improves.

In all, DNV data shows strong growth potential for hydrogen use across a variety of industries by 2050.

But the price of hydrogen versus alternative fuels, as well as the ability to supply the hydrogen economically to where it is needed, remain major hurdles that the industry will need to clear if the fuel is to fulfil its promise as the clean-burning solution to many of today's dirty energy problems.

Source: ETEnergyworld

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Thomas

Economic

After finishing college in the western Indian city of Ahmedabad, Saurav hunted for work for more than four months before he came across an advertisement for jobs at a call centre. He signed up, not knowing it would one day land him in jail.

In his job, Saurav - who asked to go by one name to protect his identity - called people in the United States, enticed them to sign up for loans and insurance policies, then told them they needed to improve their credit score by paying $50-$100.

Only, he did not work for a bank or an insurer, but a scam call centre that pitched fake products and robbed people of money that they thought would improve their credit scores.

"I didn't realise at first. It was only much later that I realised that the job was to cheat people after speaking to other colleagues who worked there," said Saurav, 25.

"But I was already too involved in it, and I was certain that I would not get another job where I could earn 20,000-25,000 rupees ($241-$302) a month, so I continued working there," he told the Thomson Reuters Foundation.

The call centre was one of thousands perpetuating telefraud on millions of people every day in India, the United States, Britain and elsewhere, with employees posing as tax officials, as workers at banks and insurers, and as tech support.

Indian police have raided hundreds of such centres in Ahmedabad, Delhi, Gurugram, Mumbai and Kolkata in recent years, and said they have charged thousands with fraud.

Saurav and two of his colleagues were arrested last year, and he spent five months in jail.

As he belatedly realised, was part of the dark underbelly of India's $220-billion information technology services industry that boomed as global firms outsourced customer support to cheaper workers with college degrees who spoke English.

But these very same factors also encouraged a parallel industry of scam call centres, with American citizens alone losing more than $10 billion to phishing gangs and fraud call centre operations in India last year, according to data from the Federal Bureau of Investigation cited by local media.

"All one needs is a computer or laptop, a phone, an internet connection, and data, which is available easily on the black market," said Ajit Rajiaan, a deputy commissioner of police in Ahmedabad, who has raided dozens of such operations in the city.

"The call centre can be run from a house, an office, or just about any place," he said, adding that nearly all those who have been arrested at such operations are men aged 18 to 25, with either a high school education or a college degree.

Future of Work

India is poised to become the world's most populous country in April, overtaking China with more than 1.43 billion people, according to estimates by the United Nations.

It also has among the youngest populations, with more than 40% under 25 years. Yet the pace of economic growth is not enough to accommodate some 12 million people joining the workforce each year.

So educated youth - once touted as a demographic dividend - are forced to turn to the gig economy delivering food and groceries, to scam call centres, online microwork, and other low-paid jobs, analysts say.

"We are at a critical moment," said Amit Basole at the Azim Premji University Centre for Sustainable Employment, pointing to high rates of unemployment among educated youth, low labour force participation of women, and "forced self-employment" because of the lack of productive jobs.

"Newly created jobs are often of the precarious kind - including gig work," he added.

Mohammed Ahmed, 21, knows this first-hand.

He has worked part-time for more than two years for Zomato and Swiggy, the largest food delivery platforms in India, putting in about six hours a day and earning about 10,000 rupees a month while he goes to college.

"I will not get a job with just a Bachelor's degree. I have to also do a Master's degree," he said.

"Even then I am not sure I can get a well-paying job. So I need this job to earn a living."

India is one of the largest and fastest-growing markets for the so-called gig economy, with nearly 8 million workers in 2020-21, and forecast to expand to 24 million workers by 2029-30, according to government think-tank Niti Aayog.

But workers earn low wages and have few protections.

"The government, the industry and employers pitch gig work as the future of work, glorifying it as something that is desirable," said Rikta Krishnaswamy, a coordinator at the All India Gig Workers' Union.

"But what we are really seeing is an erosion of hard-won labour rights. With increased digitisation, gig work is only going to get bigger and worse - especially with data annotation and labelling for AI."

Ghost Workers

AI relies on data annotation, which is the action of tagging content such as text, photos, audio and video so that machine learning models can recognise them.

Up to 1 million Indians could be working full-time or part-time in data annotation and labelling by 2030, estimates IT industry body NASSCOM.

Workers in India already make up about a third of remote online workers for clients largely in the U.S. and Britain, according to the International Labour Organization.

Several firms also provide managed services with full-time workers earning about 15,000-25,000 rupees a month.

"Data annotation is the current outsourcing model. But clients don't pay much because it is a low-skill job," said Muzammil Hussain, founder of Tika Data in Bengaluru that has labelled more than 20 million images and 1 million words.

"The money for this work is always going to be low because it is easy work, even if it's labour intensive," he said.

About 50,000 freelancers operate as ghost workers, getting just a few cents to label data on platforms such as the crowdsourcing website for businesses Amazon Mechanical Turk, according to NASSCOM.

Many are based in small towns, and have to deal with uncertain hours and wages.

"It's hard to get an account, and there is a limited number of jobs for workers in India," said Naga Raj, 28, who has done on-demand tasks on Amazon Mechanical Turk for more than three years.

"I may do 10-12 tasks, but only two or three may get approved, and I will only get paid for those - but I don't have a choice," he said.

Workers like Raj are at the "bottom of the AI value chain" with no prospect of higher wages or upskilling, said Urvashi Aneja, director of Digital Futures Lab, who studies the platform economy.

"There is a strong policy push that India can be the back-end for global AI production. But a lot of this work is very precarious, and it's not being thought through holistically, from the point of view of worker welfare or longevity," she said.

"It's a pretty bleak outlook: a lot of the clickwork and piecework that is being outsourced now will also get automated."

($1 = 82.9249 Indian rupees)

Source: bdnews24

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Owen Li

Germany has declared last-minute opposition to a landmark European Union law to end sales of CO2-emitting cars in 2035, demanding that sales be allowed of new cars with internal combustion engines after that date if they run on e-fuels.

The EU rules would require all new cars sold from 2035 to have zero CO2 emissions, making it effectively impossible to sell new fossil fuel-powered cars.

The law - which Germany, alongside a majority of EU countries and lawmakers, previously supported - would not ban internal combustion engines (ICEs).

But it is seen as a death knell for the technology because of a dearth of options that could enable ICE cars to operate without producing CO2.

Here's what you need to know.

What are E-Fuels?

E-fuels, like e-kerosene, e-methane, or e-methanol, are made by synthesizing captured CO2 emissions and hydrogen produced using renewable or CO2-free electricity.

The fuels release CO2 into the atmosphere when used in an engine. But the idea is that those emissions are equal to the amount taken out of the atmosphere to produce the fuel - making it CO2-neutral overall.

Germany and Italy want clearer assurances from the EU that sales of new ICE cars can continue beyond 2035, if they run on CO2-neutral fuels.

Who makes them?

Most major carmakers are betting on battery-electric vehicles - a technology that is already widely available - as the main route to cut CO2 emissions from passenger cars.

But suppliers and oil majors defend e-fuels, as well as a number of carmakers who don't want their vehicles weighed down by heavy batteries.

E-fuels are not yet produced at scale. The world's first commercial plant opened in Chile in 2021, backed by Porsche and aiming to produce 550 million litres per year. Other planned plants include Norway's Norsk e-Fuel, due to begin producing in 2024 with a focus on aviation fuel.

Can E-Fuels clean up cars?

E-fuels can be used in today's ICE vehicles and transported via existing fossil fuel logistics networks - good news for ICE component makers and companies which transport petrol and diesel.

Supporters say e-fuels offer a route to cut the CO2 emissions of our existing passenger car fleet, without replacing every vehicle with an electric one.

Critics highlight that manufacturing e-fuels is very expensive and energy-intensive. Using e-fuels in an ICE car requires about five times more renewable electricity than running a battery-electric vehicle, according to a 2021 paper in the Nature Climate Change journal.

Some policymakers also argue that e-fuels should be reserved for hard-to-decarbonise sectors such as shipping and aviation - which, unlike passenger cars, cannot easily run on electric batteries.

What next for the EU law?

Days before the final vote on the EU law, which was scheduled for March 7, German Transport Minister Volker Wissing called into question Germany's support for it.

That has put one of Europe's core climate change policies on hold - and surprised other policymakers, because EU countries and lawmakers had already agreed the law last year.

Alongside Germany and Italy, countries including the Czech Republic and Poland have expressed concerns about the law, raising the possibility of enough support to block it.

But other EU lawmakers and diplomats warn that allowing one country to torpedo an already-agreed law would endanger other carefully negotiated deals on EU policies.

Free Democratic Party member Wissing said the use of e-fuels should remain possible after 2035, and a promised European Commission proposal on this was still missing.

In response, the European Commission has drafted a proposal, seen by Reuters , to allow carmakers to register new cars in the EU that can run on climate neutral e-fuels only. That could be a first step towards allowing their sale after 2035.

The draft proposal said vehicles must use technology that would prevent the car from starting if it used non-carbon-neutral fuels.

The International Council on Clean Transportation said it was doubtful technologies would be able to sense whether a vehicle is operating on pure e-fuels or a blend with fossil fuels - since e-fuels have very similar properties to the fossil fuels they are designed to replace.

An EU official told Reuters any new proposal would be made only after countries approve the combustion engine phaseout. Germany's Transport Ministry said it was examining the draft proposal.

What do companies want?

Big auto component suppliers in Germany such as Bosch, ZF and Mahle are members of the eFuel Alliance, an industry lobby group, as are oil and gas majors from ExxonMobil to Repsol.

Carmakers such as Piech, Porsche and Mazda are broadly supportive of the technology. Porsche holds a stake in e-fuel producer HIF Global.

BMW has invested $12.5 million in e-fuel startup Prometheus Fuels, while also investing billions in battery-electric technology.

Other carmakers including Volkswagen and Mercedes-Benz are betting on battery-electric vehicles to decarbonise. Volvo and Ford this week urged EU countries not to row back on the 2035 phaseout of new petrol and diesel cars.

Source: CNA

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Devin

With Ramadan starting, households in Morocco, Algeria and Tunisia will be struggling to supply their pantries. Ongoing inflation has pushed up food prices and caused shortages.

Inflation was supercharged by the Russian invasion of Ukraine in February 2022. Morocco, Tunisia and especially Algeria are key wheat importers and saw higher prices weigh down state budgets during 2022.

Higher prices for fertilizers and transportation have also pushed up food production costs globally. But in Morocco, Algeria and Tunisia, the weeks leading up to Ramadan typically add to inflation, as households stock up for festivities during the holy month.

Algeria's national statistics agency reported overall annual inflation at 9.49% in January, and food inflation reached 13.53%. Algerians have been especially penalized by the price of fresh goods, which in the capital, Algiers, jumped by 23.58% year on year.

The country spends over $10 billion yearly importing food, according to estimates by the United States Department of Agriculture. Main imports include cereals, powdered milk, cooking oil and sugar.

But Algeria's inflation has also been driven by an injection of money into the system, after higher energy prices raised the country's oil and gas export revenues. Mourad Ouchichi, an economist and lecturer at the University of Bejaïa in Algeria, told Al-Monitor, "This money is being distributed through a nominal increase in salaries and unemployment benefits. The government is using the money to buy social peace, and this has added to inflation."

Some key ingredients for Ramadan are especially weighing down on Algerians. The price of onions in January rose by more than 96% year on year, while orange prices jumped by 70%. Lamb meat and egg prices rose by 43% and 33% respectively, according to figures by the national statistics agency.

Annual inflation in Tunisia reached 10.4% in February, with food prices growing by 15.6%. The country's economic crisis has devalued the currency and left the cash-strapped government often unable to pay for imports of subsidized goods. This has led to cyclical shortages and higher prices.

On average, household consumption in Tunisia rises by 34% during Ramadan. But most Tunisians are struggling to make ends meet. The price of vegetable oils in February rose 24.6% year on year, chicken increased by 25.3%, and milk by 16.1%.

On Thursday, Tunisia's Ministry of Commerce announced maximum sale prices and margins for basic goods such as eggs, fruits, and chicken until the end of Ramadan.

In Morocco, annual inflation accelerated to 8.9% in January 2023, with food inflation reaching 16.8%. Besides global commodities such as wheat, Moroccan inflation is also being driven by transport costs and fragmented distribution channels.

Since it eliminated fuel subsidies in 2015, Moroccan domestic fuel prices have fluctuated according to global prices. Because it imports over 90% of the hydrocarbons it consumes, Morocco is especially vulnerable to energy and transport price surges.

Rachid Aourraz, an economist and a non-resident scholar at the Middle East Institute in Washington, told Al-Monitor, "If inflation continues to climb over the coming months, it is highly probable that we will see street protests."

North African governments have long been aware of how sudden food price increases can trigger popular discontent. Faced with escalating high prices, authorities in the region have been clamping down on speculation by traders.

In Tunisia, the government passed a law in March 2022 that includes jail terms of up to 30 years for people or groups accused of food profiteering. Tunisian media regularly shows security forces seizing food items from warehouses and detaining alleged speculators.

Algeria, too, has jailed traders accused of buying subsidized goods such as semolina and cooking oils to sell in neighboring Tunisia at a profit.

But speculation is the easiest aspect of inflation to deal with, rather than its biggest driver. "You cannot eliminate speculation with a law," says Mourad Ouchichi. "Governments like to showcase speculation as the main cause for inflation mostly to show they are working to fight inflation."

Over the medium term, increasing domestic food production will increase availability and reduce food prices. But during Ramadan and in the coming months at least, citizens in Morocco, Algeria, and Tunisia will continue to face hard choices at the grocery store.

Source: Al-Monitor

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Justin

Central Bank

Economic

Further encouragement comes from new business growth accelerating further to the fastest since April of last year. More disappointingly, new orders growth was largely limited to the service sector and even here it seems that a lack of available staff meant this demand could not be fully met. The upshot of these constraints and labour shortages is of course more upward pressure on prices. Although the overall rate of inflation for goods and services has cooled further from the peaks seen in the spring of last year, in the immediate aftermath of the invasion of Ukraine, the rate of increase remains stubbornly higher than anything recorded by the survey in the two decades leading up to the pandemic.

However, the bigger picture is that the improvement in order book growth adds to signs that a near-term recession has been avoided, and an upturn in companies' expectations for the year ahead indicates that business sentiment has been little affected so far by the banking sector woes and that firms are more focused on growth possibilities.

Economy expands for second successive month

UK business activity increased for a second successive month in March, according to the flash PMI survey data compiled by S&P Global and sponsored by CIPS, suggesting a modest growth revival after six months of continual decline prior to February. The composite PMI registered 52.2 according to the provisional data, down from 53.1 in February but nevertheless remaining above the 50.0 neutral level to indicate further expansion.

The latest reading is consistent with GDP growing at a quarterly rate of 0.2% after a 0.3% pace had been indicated for February. Coming on the heels of a modest decline in January, the PMI readings point to an economy growing in the first quarter by just under 0.2% after having stalled in the fourth quarter of last year and having contracted in the third quarter.

UK Economic Resilience in March Signalled by Flash PMI_1

Service sector leads upturn but expansion constrained by staff shortages

March's upturn was led by a second consecutive monthly expansion of service sector output, albeit with the rate of increase slipping from February despite an improved rate of new orders growth. Service providers suffered a lack of staff, which held back their ability to meet demand. Although employment rose across the service sector in March, the rise was only marginal and weaker than recorded in February. Backlogs of work consequently rose in the service sector for a second month in a row, underscoring the labour market constraint on the sector's expansion.

Manufacturing held back by paucity of demand

In manufacturing, the principal constraint on growth was a paucity of demand rather than a lack of workers. Output fell back into decline after having briefly returned to modest growth in February, as factories reported another steep drop in their backlogs of work. New orders rose only marginally in March, albeit signalling a welcome end to nine months of decline to suggest the downturn in demand may have halted, but stronger demand growth will likely be needed in the coming months to drive production growth.

UK Economic Resilience in March Signalled by Flash PMI_2

UK Economic Resilience in March Signalled by Flash PMI_3

Cost growth highest in services

Cost divergences were also noteworthy across the sectors. Although slumping demand for raw materials and the steepest improvement in supplier delivery times since 2009 helped drive input cost inflation down in manufacturing, to the lowest since June 2020, service sector input cost inflation remained elevated, in part reflecting upward wage pressures.

UK Economic Resilience in March Signalled by Flash PMI_4

Although the overall rate of service sector input cost inflation eased to the lowest for 22 months, unlike manufacturing it saw the rate of inflation continue to run at one of the highest levels seen in the survey's two-decade history.

The sustained upward pressure on costs fed through to higher prices charged for goods and services. While selling price inflation also cooled further from the peak seen in April of last year, the rate of increase remains highly elevated and indicative of consumer price inflation (CPI) running well above the Bank of England's 2% target in the near-term. However, the overall trajectory is one of slowing price increases, which should feed through to further CPI inflation moderation as the year proceeds.

UK Economic Resilience in March Signalled by Flash PMI_5

Resilience means more rate hikes

The survey findings added to the case for the Bank of England's 25 basis point rate hike rise in March, which took the Bank Rate to 4.25%, its highest since 2008. The strength of the service sector expansion, combined with evidence of wage growth feeding through to stubbornly high service sector cost growth, likely adds to chances of further rate hikes in the coming months, especially as the survey's future output expectations indices remained resilient, and even rose further in manufacturing, despite the recent banking sector uncertainty.

UK Economic Resilience in March Signalled by Flash PMI_6

UK Economic Resilience in March Signalled by Flash PMI_7

Source:S&P Global Market Intelligence

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Cohen

Energy

Experts hail Beijing's evolving role, call for US to co-lead cooperation

Experts have said that China has been approaching the center of international clean energy cooperation over the past few decades, and its role is evolving. Also, the United States and China should and could cooperate and lead global cooperation in dealing with climate change despite rising political and economic tensions.

The highlights of Joanna I.Lewis' new book, Cooperating for the Climate: Learning from International Partnerships in China's Clean Energy Sector, were discussed at a recent webinar titled US-China Cooperation and Leadership in Climate Change hosted by the Center for Strategic and International Studies, or CSIS.

Lewis is a provost distinguished associate professor of energy and environment and director of the Science, Technology, and International Affairs Program at Georgetown University's Edmund A. Walsh School of Foreign Service in Washington, DC.

According to Lewis' introduction, her book looks at how countries have been cooperating with China on clean energy and climate change over the last three decades. It created a new database that includes China's 400-plus bilateral agreements in the climate and clean energy sector with 40 countries and the European Union. The book also develops three in-depth case studies that look at three different energy research centers, providing more details about how these specific agreements play out.

Based on the database and case studies, Lewis proposed an integrated framework combining political, economic, and technical factors to help explain the rationale behind and the structure of these cooperation mechanisms, how these different programs help cross-border clean energy research and development, and how these models are evolving.

Tangible outcomes

The book also provides some metrics to measure tangible outcomes from cooperation efforts, especially those with multiyear, multistakeholder investments and gave an international look at cooperation with China.

"Because China plays such a central role in clean energy, technology, development, and dissemination, we can start to understand how these technologies are likely to evolve and the global role of innovation and cooperation in our low-carbon transition," said Lewis.

The three case studies in the book focus on the US-China Clean Energy Research Center, or CERC, the China National Renewable Energy Center, or CNREC, with the Danish government, and the China-Brazil Center for Climate Change and Energy Technology Innovation (China-Brazil Center).

In Lewis' analysis, the CERC is a model project of US-China cooperation in clean energy and climate change. It was built in 2009, which she described as the "banner year" for the history of US-China collaboration.

"The US had been cooperating for decades with China, but this was really sort of the first time that this issue was elevated on the political and bilateral agenda. And there was just a record number of agreements signed that year," she said.

"During the (Donald) Trump administration, where climate change was overall, less of a diplomatic priority, no new agreement was signed between the US and China for several years."

The China-Brazil Center, she said, is one of the few examples of another emerging economy working with China in the clean energy space, and it is a "unique effort to bring together researchers of both countries while with a high-level diplomatic oversight".

"We have seen this shift where the knowledge and the know-how and the technology is no longer flowing just to China, but also from China with China's really dramatic growth and experience in this sector and in many ways leading to the deployment of these technologies," Lewis noted.

"This is shaping China's own science and technology strategy as well as sort of China's role in the world in terms of its role as a science and technology power," she added.