Bloomberg Intelligence, Numera Analytics and Vertical Research Partners analysts invite you to join us for a joint webinar regarding key issues in the volatile recovered-fiber market and its impact on market pulp and corrugated packaging.
To participate in this webinar taking place on June 20, 2018, 10:00 AM EDT, please register here.
Bloomberg Intelligence, Numera Analytics and Vertical Research Partners analysts invite you to join us for a joint webinar regarding key issues facing the corrugated packaging market, with a focus on North America and Europe. Paul Leclair, Vice President and Chief Economist at Numera Analytics, will discuss demand for corrugated boxes, which has been growing at a healthy clip in North America and Europe. He will focus on how long it can last by zeroing in on the market segments that are driving the growth and macro headwinds that could derail the expansion.
To participate in this webinar taking place on April 17, 201,8 11:00 AM EDT, please register here.
Global retail spending slowed down somewhat in December, falling 0.1% from its November level. As a result, retail volumes closed the year up 4.6% from 2016, exceeding the rate of growth implied by fundamentals (+4.4%). Transitory income shocks have now pushed private consumption 0.5% above its stable growth path, adding to inflationary pressures. Global CPI inflation accelerated in the fourth quarter, rising 3.8% SAAR. Considering PPI inflation is currently well above its steady-state level (4.1% versus 1.7%), we expect consumer prices – and in particular retail prices – to accelerate in 2018, increasing the likelihood of monetary tightening.
Global manufacturing surged last December, rising 7.4% SAAR (+4.9%y-o-y) to close the year up 4.0%. The gap between actual and potential output widened by some 20 basis points to 1.5%, the largest cyclical deviation since mid-2008. As expected, PPI inflation weakened somewhat in December (+0.3%) held back by sluggish growth in raw material prices. Global producer prices rose 4.1% in 2017, fully recovering the losses from the two previous years. Given the delayed pass-through from producer to consumer prices, tight operating conditions should drive up CPI inflation in 2018 even if the cyclical momentum dissipates.
Global industrial production accelerated further in December, this time rising at an annualized rate of 7.7% (+4.1%year-over-year). Production was up 3.5% for the year as a whole, a significant improvement from the 1.8% increase recorded in 2016. Underlying the headline figure was a 4.0% increase in manufacturing activity, facilitated by a noticeable pick-up in private sector investment. In OECD countries, demand for fixed capital (structures, equipment) grew 3.5% last year, compared to 1.6% in2016. Unsurprisingly, output growth stemmed primarily from durable goods industries.
Global retail spending rose markedly in November, exceeding 5% growth for the first time in the post-crisis period. Strong growth was both a reflection of permanent and transitory factors. About two-thirds of the overall increase reflected strong equilibrium consumption (+4.7% year-on-year). Positive demand shocks accounted for the remaining third, with the consumption gap rising three basis points to 0.6%. Rapid growth in demand, alongside rising inflation expectations, supported global CPI inflation, up 5.1% SAAR in November.
Industrial activity continued to grow steadily in November, this time rising 4.9% annualized (3.5% year-on-year). The November result reflected strong demand for manufactured goods (+7.7% SAAR), which compensated for sluggish mining production in emerging markets. The divergence between factory and mining output is especially prevalent in Latin America, where extractive industries have underperformed the overall industrial sector for 19 consecutive months.
Global manufacturing expanded 4.4% year-over-year in November, and at 3.9% after 11 months is on track to record its strongest year of growth since 2011. As was the case in previous months, steady growth in productive capacity (+3.2%) was amplified by increasingly favourable cyclical conditions. Production volumes have now outpaced potential output for 13 months, the longest period of above-trend growth in the post-recession period. At 1.3% in November, the manufacturing output gap was at its highest level since March 2012. Tight operating conditions continued to exert upward pressure on producer prices, which rose 0.5% for the fourth consecutive month.
Bloomberg Intelligence, Numera Analytics, and Vertical Research Partners analysts invite you to join us for a joint webinar on key issues regarding the global pulp market, which has seen an extraordinary run-up in prices this year due to accelerated global economic growth, a slower than expected ramp-up of new capacity, unscheduled mill downtime and an environmental clampdown in China on polluting capacity and recovered paper imports. Will the market be vulnerable in 1H18 to new and resumed supply, and if so, will it tighten thereafter as capacity expansion tails off?
To participate in this webinar taking place on November 15, 2017 11:00 AM EST, please register here.
Claims that US inflation no longer responds to cyclical unemployment are misguided. New research by Numera Analytics shows job market gains have so far been offset by weak global conditions, an increasingly important driver of consumer prices in advanced economies. As global headwinds dissipate, rising import prices and strong aggregate demand will drive up headline inflation.
In our view, the current debate is much too focused on simple correlations between inflation and the unemployment rate. A weaker correlation has led many observers to declare the “death” of the Phillips curve. But correlations are just the outcome of complex shifts in underlying drivers. We find globalization has made US CPI inflation more responsive to the international environment, amplifying the effect of global macro shocks on consumer prices. Our findings have major implications for monetary policy. If inflation is less sensitive to domestic conditions, stabilizing inflation may come at the cost of higher debt burdens or larger output fluctuations. For macro investors, the results also imply anticipating future changes in interest rates and asset prices requires a better grasp of global economic conditions.
This special research note was written by Joaquin Kritz Lara, head of Macro Research and Senior Economist at Numera Analytics.