U.S. labour costs rise modestly in fourth quarter
The Employment Cost Index, the broadest measure of labour costs, increased 0.5 per cent after rising 0.6 per cent in the third quarter, the Labor Department said on Tuesday.
That slowed the year-on-year rate of increase to 2.2 per cent from 2.3 per cent in the year to September. Economists polled by Reuters had forecast the ECI rising 0.6 per cent in the fourth quarter. (…)
Wages and salaries, which account for 70 per cent of employment costs, increased 0.5 per cent in the fourth quarter. They increased by the same margin in the third quarter.
Wages and salaries were up 2.3 per cent in the 12 months through December. That followed a 2.4 per cent gain in the year to September. Benefits for all workers increased 0.4 per cent in the October-December quarter after rising 0.7 per cent in the third quarter.
Eurozone Manufacturing PMI hits 69-month high at start of 2017
At 55.2 in January, up from 54.9 in December, the final Markit Eurozone Manufacturing PMI® rose to a 69-month high and was above its earlier flash estimate of 55.1. National PMI data signalled that growth was fastest in Austria, the Netherlands and Germany. The rate of improvement in business conditions hit a 70-month record in Austria, a three-year high in Germany and remained elevated in the Netherlands despite easing to a three-month low. Strong growth was also signalled in Spain (20-month high) and Ireland (2-month low). The recent improved performance of France continued to gather pace, as highlighted by the French PMI rising to a 68-month high. - The rate of growth in new export business accelerated to a three-year high, reflecting both the recent depreciation of the euro and signs of improving global market demand. Germany, Italy, Spain, the Netherlands, Austria and Ireland all registered marked increases in new export work. There was a moderate expansion in France,
whereas Greece saw foreign demand contract at the most severe pace since November 2015. - Staffing levels rose for the twenty-ninth successive month and at the fastest pace since April 2011. Jobs growth strengthened across the ‘big-four’ nations.
- Price pressures continued to intensify at the start of 2017. Cost inflation accelerated to a 68-month record, while average charges rose to the greatest extent in five-and-a-half years.
- Vendor price hikes were also often seen as a function of demand exceeding supply. January saw the most widespread delays in vendor lead times since June 2011 amid a further marked increase in purchasing activity.
- The January survey also saw the first publication of the recently-launched Future Output Index, based on a question asking if companies expect production to
be higher, the same or lower in 12 months’ time. The index came in slightly above its earlier flash estimate and signalled that business optimism hit its highest
level since the start of the time series history in July 2012.
Japan manufacturing conditions improve and outlook brightens at start of 2017
- The headline Japan Manufacturing Purchasing Managers’ IndexTM (PMI)TM posted 52.7 in January, up from 52.4 in December, signalling a stronger improvement in operating conditions at Japanese manufacturers.
- Production rose for the sixth consecutive month at the start of 2017. Moreover, the rate of expansion was little-changed from December’s 12-month high.
- January data pointed to the sharpest increase in new work inflows since December 2015. Firms linked this to greater domestic and international demand as well as improved advertising. Reports of an increase in foreign demand was also backed by the survey data, with new export orders rising at the quickest rate in one year.
- The rate of job-creation was little changed from December’s 32-month high.
- Selling prices increased at the quickest rate in 14 months as firms tried to pass some of their cost burdens on to clients.
- Finally, the newly-launched Future Output Index signalled strong confidence towards the outlook over the next 12 months, with over one-quarter of the survey panel forecasting higher production.
Measures of Inflation Tick Up Around the Globe After years of fighting against deflation, the U.S., the eurozone and Japan show glimmers of life in consumer prices and wages, evidence that an era of exceptionally low inflation is receding from the global economic landscape.
(…) In the eurozone, consumer prices rose 1.8% in January from a year earlier, a product of the energy rebound which made for the sharpest increase in nearly four years, up from just 1.1% in the year to December 2016, the European Union’s statistics agency said Tuesday.
Market-based measures of inflation have also increased. In Germany, expected inflation over 10 years as measured in bond markets has risen from 1.10% in early November to 1.36% on Tuesday, according to Thomson Reuters. In Japan, it has ticked up from 0.45% to 0.61% in the same period. (…)
French and Spanish inflation figures were particularly strong, with prices rising by 1.6% and 3%, respectively, in the year to February. (…)
Recent PMI surveys have been warning of increasing price pressures across the world as manufacturers saw rising capabilities to pass on higher costs to their clients. January PMIs now suggest that demand is beginning to outstrip supply and vendor lead times are increasing.
The Sales Managers’ Indices also reveal rising prices in recent months:
Prices Charged Index
USA CHINA
- A few charts on inflation trends in the world from The Daily Shot:
EARNINGS WATCH
- 207 companies (58.3% of the S&P 500’s market cap) have reported. Earnings are beating by 2.9% while revenues are surprising by 0.2%.
- Expectations are for revenue, earnings, and EPS growth of 4.2%, 5.2%, and 7.3% (5.1% ex-Financials), respectively.
- EPS is on pace for 8.5%, assuming the current beat rate for the remainder of the season. This would be 7.0% excluding the benefit of easy comps at AIG and GS.