Before I go, another quick comment on the US GDP numbers.
James Knightley, chief international economist at ING, notes that GDP growth outperformed thanks to inventory building and falling imports. He explains:
Both the fourth quarter US GDP report and the December durable goods numbers are strong at the headline level, but look a little closer and evidence of a deteriorating growth story is plain to see
Looking to first quarter GDP data, the momentum in the numbers isn’t looking great. We’ve had six consecutive MoM falls in residential construction, three consecutive drops in industrial production, the big falls in retail sales in November and December already mentioned and now we find both the manufacturing and non-manufacturing ISM indices are in contraction territory.
We need to see a turn quickly in something to prevent first quarter GDP turning negative. But the Conference Board’s measure of CEO confidence is now at the lowest level since the Global Financial Crisis, which suggests that the risk is corporate America will turn increasingly defensive, implying a greater focus on costs rather than motivation to expand businesses.
Closing summary
The former chief economist of the Bank of England has warned there is “more pain to come” for households and the wider economy as mortgage rate increases hit people’s bank accounts and weigh on spending.
Andy Haldane, who is now chief executive of the Royal Society of Arts, said it was painful to see the effects of rising interest rates since he left the Bank of England and its rate-setting monetary policy committee in June 2021.
The UK’s political instability – a “ministerial merry-go-round” in Haldane’s terms – has meant that government policy has not been followed through, and there is still a lack of a “medium-term plan for growth in this country”, he added.
More than 300 jobs at Asda are at risk and 4,300 staff will receive a pay cut after the supermarket announced a swathe of changes to night shifts, Post Office outlets and pharmacies to cut costs.
The supermarket chain said 211 night shift manager roles were going and a further 4,137 staff would lose out on premiums of at least £2.52 an hour for working nights as it switched the restocking of packaged groceries and frozen food to daytimes and evenings.
In addition, Asda planned to close seven of its 254 in-store pharmacies, putting 62 jobs at risk, including 14 pharmacists.
The US economy grew faster than expected at the end of last year, suggesting a soft landing despite the interest rate hikes, according to some economists – although others say the underlying growth is weaker and still forecast a “mild recession” in the first half of this year. GDP rose at an annualised rate of 2.9% between October and December, faster than the 2.6% forecast by economists, a slight slowdown from 3.2% growth in the third quarter.
European stock markets are pushing higher as upbeat quarterly results from TSB owner Sabadell, STMicroelectronics and Nokia helped ease recession worries. Wall Street is also up after the GDP data, with weekly jobless claims and durable goods orders for December also better than expected.
Our other main stories today:
Many thanks for reading. Back tomorrow morning, bright and early. Bye!! – JK
