Thomas Watts, Investment Analyst, abrdn, comments on the economic data releases this week.
This week started on the ‘scientifically approved’ most depressing day of the year, “Blue Monday”, just far enough after the festive period for it to become a distant memory but still far enough away from the warmer weather and Easter bank holidays to get excited.
The first few weeks of the year have been anything but depressing for investors however, as faltering inflation and China opening up its borders have conspired to drive almost all asset prices higher. Many will be hoping such a jolly start to the new year can continue, even on what should be a relatively quiet start to the week, as the US shuts its markets on Monday, in observance of Martin Luther King Jr Day.
One of the main reasons to be cheerful recently has been the Chinese government’s abandonment of its “Zero-Covid Policy”, now favouring opening up its borders and scrapping its compulsory quarantine periods. Although the relaxation of these policies may come too late to effect the data, Tuesday sees the release of China’s quarterly year on year GDP statistics, measuring the performance of the Chinese economy throughout the last 3 months of 2022, compared to a year earlier. GDP data acts as the broadest measure of economic activity and the primary gauge of the economy’s health and so is a vital piece of the economist’s toolbox.
Tuesday 17 January will be an important day on domestic shores, as the Office for National Statistics releases a host of employment data, including both average hourly earnings numbers as well as the amount of people claiming unemployment related benefits during the previous month. With the Bank of England’s Chief Economist warning that the bank will have to continue to raise rates if wage inflation fails to subside, the numbers could have a large impact on currency markets, as traders speculate over the pace of future rate policy.
The middle of the week brings us not only inflation readings here in the UK but also retail sales data in the US. Switching from the High Street here to Main Street in the US, we should get an idea of how American retailers have fared during their “holiday season”. American consumers have been facing a similar cost of living crisis to our own, so the results will make for an interesting comparison.
The US should retain investor attention for the remainder of the week as their Department of Labor releases its unemployment claims numbers alongside the Federal Reserve Bank of Philadelphia’s Manufacturing index. The former piece of data is particularly interesting as it surveys about 250 manufacturers in the Philadelphia area, one of the heartlands of American industry, asking respondents to rate the relative level of the general business conditions they face.
[Main image: markus-winkler-IrRbSND5EUc-unsplash]
