Source: Trading News
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Consumer confidence index realized as 91.1

Consumer confidence index calculated from the results of the consumer tendency survey carried out in cooperation with the Turkish Statistical Institute and Central Bank of the Republic of Türkiye increased by 4.0% in May compared to the previous month. The index became 91.1 in May while it was 87.5 in April.

Consumer confidence index, sub-indices and rate of changes, May 2023

The next release on this subject will be on June 19, 2023.
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EXPLANATIONS

In monthly consumer tendency survey, consumers’ assessments and expectations on financial standing and general economic situation, also their expenditure and saving tendencies are measured.

The consumer confidence index calculated from the survey results is evaluated within the range of 0-200. It indicates an optimistic outlook when the index is above 100, but it indicates a pessimistic outlook when it is below 100.

The increase in probability of borrowing money index, which is the one of the indices concerning consumer tendency indicates an optimistic outlook while decrease in index indicates a pessimistic outlook. Similarly, increase in assessment and expectation in consumer prices change rate indices indicate a decrease in assessment/ expectation in consumer prices and vice versa. The increase in number of people unemployed expectation index indicates decrease of number of people unemployed expectation, whereas decrease indicates increase of number of people unemployed expectation.

No seasonal effect has been determined in the sub-indices used in the calculation of the consumer confidence index since January 2023. Detailed information on this subject is submitted in the metadata section.

Source: TurkStat
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In Portugal, GDP in real terms registered a year-on-year rate of change of 2.5% in the first quarter (3.2% in the previous quarter) and a quarter-on-quarter increase of 1.6% (0.3% in the previous quarter).

The industrial production price index registered a negative year-on-year rate of change in April (-0.9%), which had not happened since February 2021, after increases of 8.9% and 0.1% in February and March, in sequence of the uninterrupted deceleration profile observed since July 2022. The grouping of Energy was decisive for the reduction of the total index, with rates of -21.5% and -17.9% in March and April, respectively. Excluding the energy component, this index decelerated to 4.7% (8.1% in March). The index for consumer goods recorded a year-on-year change of 9.9% (11.6% in the previous month), decelerating for the fifth consecutive month, after reaching in November the highest growth of the current series (16.2%).

The year-on-year rate of change in the Consumer Price Index (CPI) decelerated to 5.7% in April, 1.7 percentage points (p.p.) less than in the previous month. The index for unprocessed decelerated, from 19.3% in March to 14.2% in April. On the external side, the implicit prices of exports and imports of goods, in March, registered year-on-year rates of change 4.8% and -2.2%, respectively (7.1% and 4.4% in February).

The short-term indicators for economic activity from the perspective of production, available for March, point out to a nominal slowdown in Industry and Services, a real decrease in Industry and an acceleration in Construction. From the expenditure side, the economic activity indicator increased less intensely in March, while the Gross Fixed Capital Formation indicator decreased in year-on-year terms and the private consumption indicator accelerated. The economic climate indicator, which summarizes the balances of responses to questions relating to business surveys, increased between January and April.

According to the Labour Force Survey, in the first quarter of 2023, the unemployment rate stood at 7.2%, 0.7 percentage points more than the rate observed in the previous quarter (5.9% in the first quarter of 2022). The number of unemployed increased by 23.3% in year-on-year terms (year-on-year rate of change of 3.7% in the previous quarter). The labour underutilization rate was 0.8 percentage points higher than in the fourth quarter, standing at 12.5% and 680.7 thousand people (633.1 thousand people in the previous quarter). Total employment increased by 0.4% compared to the previous quarter and 0.5% in year-on-year terms (year-on-year rate of change of 0.5% in the fourth quarter). The volume of hours actually worked has increased by 3.4% in year-on-year terms (4.6% in the previous quarter). The active population had a year-on-year increase of 1.8%.

Source: Statistics Portugal
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After a significant increase in prices that started before the Russian invasion of Ukraine but skyrocketed up to the second semester of 2022, electricity and natural gas prices have recently shown signs of stabilizing, partly due to policies and interventions by EU governments. EU countries opted for various measures, such as reducing taxes and fees, temporary tax waivers to consumers, price caps, providing lump sum support or allocating vouchers to final consumers, and some countries applied regulated prices.

Compared with the second half of 2021, the share of taxes in the electricity bill dropped sharply from 36% to 16% (-18.3%) and in the gas bill from 27% to 14% (-15.8%), with all EU countries putting in place governmental allowances and subsidies or reduce taxes and levies to mitigate high-energy costs. These governmental measures, while lowering energy prices for the final consumer, have burdened governmental accounts.

This information comes from data on electricity and gas prices published recently by Eurostat. The article presents a handful of findings from the more detailed Statistics Explained articles on electricity prices and natural gas prices.

Electricity prices up in all EU countries except Malta and the Netherlands

Household electricity prices rose in all EU members, except Malta (-3%, in national currencies) and the Netherlands (-7%), in the second half of 2022, compared with the same period of 2021. Prices in Malta are regulated, while the Dutch government supports consumers with lump sums and taxes reduction. The highest increases were recorded in Romania (+112%), Czechia (+97%), Denmark (+70%), Lithuania (+65%) and Latvia (+59%), while the lowest were in Luxembourg (+3%), Austria and Germany (both +4%), and Poland and Bulgaria (both +5%). Expressed in euro, average household electricity prices in the second half of 2022 were lowest in Hungary (€10.8 per 100 kWh), Bulgaria (€11.5) and Malta (€12.8) and highest in Denmark (€58.7), Belgium (€44.9), and Ireland (€42.0).

Gas prices increased in all EU countries

Between the second half of 2021 and the second half of 2022, gas prices increased in all 27 EU countries. Gas prices (in national currencies) surged the most in Czechia (+231%), Romania (+165%), Latvia (+157%), Lithuania (+112%) and Belgium (+102%). There were only two increases below 20%: Croatia (+14%) and Slovakia (18%). All price increases are from the energy and supply component, mainly driven by the recent energy crisis.

Expressed in euro, average household gas prices in the second half of 2022 were lowest in Hungary (€3.5 per 100 kWh), Croatia (€4.5) and Slovakia (€4.9) and highest in Sweden (€27.5), Denmark (€20.8) and the Netherlands (€19.3). The price of natural gas for households in Sweden was 157 % higher than the EU average price. However, natural gas use in Sweden is very limited.

Source: Eurostat
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The consumer price index increased 9.2 percent year on year in March, less than the previous month’s 10.9 percent increase. This was slightly higher than the 9.1 percent growth noted in the flash report.

According to estimates, EU harmonized inflation fell to 9.2 percent from 11.0 percent a month before.

“In March 2022, after the start of the war in Ukraine, fuel and heating oil had become massively more expensive – in comparison, fuel and heating oil prices have now fallen sharply,” said Tobias Thomas, director general at Statistics Austria.

Food prices increased relatively slowly in March 2023, but restaurant costs rose roughly in line with February.

The annual price increase in housing and utilities was 14.1 percent in March, down from 16.5 percent in February. Food and non-alcoholic beverage prices rose considerably, but at a slower rate of 14.5 percent.

The consumer price index rose 0.5 percent on a monthly basis, up from 0.4 percent previously. At the same time, the HICP’s monthly gain of 0.5 percent was verified.

Source: RTT News
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GDP grew 4.5 percent year on year in the December quarter, quicker than the revised 3.7 percent increase in the previous three months. That was slightly lower than the 4.6 percent seen in the previous estimate released on March 8.

Seasonally adjusted GDP growth increased to 4.8 percent in the third quarter, up from 4.4 percent in the previous quarter. The initial report said that the pace of expansion was 4.9 percent.

Total final consumption increased by 3.0 percent over the previous year, while gross fixed capital formation increased by 2.2 percent.

The change in inventories contributed favorably by 0.4 percent, while net exports fell by 0.8 percent.

GDP increased by 1.0 percent seasonally adjusted in the fourth quarter, following a 1.2 percent increase in the third quarter. Figures remained unchanged from the prior report.

Source: RTT NEWS
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Advance information indicates that real GDP increased 0.3% in February. Increases in the mining, quarrying, and oil and gas extraction, manufacturing, and finance and insurance sectors were slightly offset by decreases in construction, wholesale trade, and accommodation and food services. Owing to its preliminary nature, these estimates will be updated based on more complete data with the release of the official GDP data for the month of February on April 28.

Rebounds in several industries drive the gain

Many of the main drivers of growth in January were also the largest contributors to the December decline. In January, the wholesale trade, transportation and warehousing, and mining, quarrying and oil and gas extraction sectors all rebounded from declines recorded in the previous month. After remaining relatively flat in the second half of 2022, activity in accommodation and food services was also among the top contributors to growth in January, led by food services and drinking places.

Wholesale activity rebounds in January

Wholesale trade rose 1.8% in January, more than offsetting the declines observed in the previous two months. Overall, seven of nine subsectors posted gains.

Wholesalers of machinery, equipment, and supplies (+2.4%), specifically construction and industrial equipment, drove the increase in January, as imports of industrial machinery, equipment and parts rose, coinciding with strong imports of machinery and parts for the new liquefied natural gas terminal being constructed in British Columbia.

Mining, quarrying and oil and gas extraction rebounds as oil sands extraction expands

Mining, quarrying and oil and gas extraction expanded 1.1% in January after the sector stepped back 3.3% in December, due in part to unplanned maintenance. An oil spill in Kansas, United States impacted the supply of Canadian crude oil to the Keystone export pipeline in December.

Oil and gas extraction rose 1.1% in January, led by oil sands extraction (+1.8%) as extraction and exports of crude bitumen increased. Still, unplanned upgrader maintenance constrained production of upgraded synthetic oil, which tempered the overall growth in the oil and gas extraction subsector.

Oil and gas extraction (except oil sands) was essentially unchanged in January, as an increase in natural gas production was offset by a decrease in conventional crude oil production, primarily due to lower offshore production in Newfoundland and Labrador and Saskatchewan.

Mining and quarrying (excluding oil and gas extraction) rose 1.0% in January, led by a sharp increase in coal mining (+22.5%) as exports, particularly to China, rose. Declines in non-metallic mineral mining and quarrying (-2.0%) and metal ore mining (-0.5%) partially offset increases in the sector.

Manufacturing activity rises

The manufacturing sector grew 0.5% in January, as growth in durable goods manufacturing more than offset a decline in non-durable goods manufacturing.

Durable goods manufacturing grew 1.2% in January, up for a third consecutive month. Machinery, miscellaneous, fabricated metal, and transportation equipment manufacturing drove the increase in the month. Motor vehicle manufacturing (+20.0%) posted the largest increase within the manufacturing sector. Exports of passenger cars and light trucks rose 18.7%, as easing supply chain and shipping capacity constraints alongside an increase in production days in January paved the road to higher production.

Non-durable goods manufacturing contracted 0.3% in January, its sixth consecutive decline. The chemical manufacturing subsector (-6.3%) led the decrease. Lower activity in the pharmaceutical and medicine manufacturing industry contributed the most to the decline, with exports falling 2.0% in January. A gain in food product manufacturing (+1.8%) partially offset the overall decline in non-durable goods.

Construction expands

In January, the construction sector (+0.7%) posted its largest gain since March 2022, reflecting increases in all construction subsectors.

Engineering and other construction activities (+1.2%) continued its long-term ascent and was the main driver of growth in the sector. Residential building construction (+0.6%) was another large contributor to the growth, rising for the 2nd time in 10 months as home alterations and improvement drove the gain in January. Non-residential building construction (+0.3%) posted a second consecutive increase as industrial building construction and alterations and improvement expanded. Repair construction (+0.4%) expanded for the first time in four months due to gains in both residential and non-residential repairs.

Transportation and warehousing rebounds following adverse weather in December

Transportation and warehousing rebounded 1.9% in January, more than offsetting a 1.1% decrease in December which, in part, resulted from bad weather conditions late in the month.

Rail transportation (+12.1%) contributed the most to the January increase, its largest growth rate since May 2014, as carloadings of several major commodities including coal, iron ore and fertilizers as well as passenger vehicles increased in January 2023.

A rebound in domestic air travel in January contributed to an increase in air transportation (+0.2%) after December’s decline.

Accommodation and food services expands

The accommodation and food services sector rose 4.0% in January. Increased activity in the food services and drinking places subsector (+4.9%) contributed significantly to the growth in the sector, as each type of activity saw an increase.

After rebounding from the effects of Omicron in the first half of 2022, activity in the food services and drinking places subsector remained relatively flat in the second half of the year. The January increase (+4.9%) followed a decline in November and a slight gain in December. This was the first January since the start of the COVID-19 pandemic with no COVID-19 restrictions impacting the subsector.

Arts, entertainment and recreation records a gain in January

Arts, entertainment and recreation increased 2.1% in January, with the increase solely coming from performing arts, spectator sports, and heritage institutions (+6.8%).

In January, there were more home games hosted by Canadian NHL teams than usual, specifically the Toronto Maple Leafs and Montréal Canadiens. This, coupled with the World Junior hockey tournament occurring in both New Brunswick and Nova Scotia, drove the increase.

Public sector continues to grow

The public sector (educational services, health care and social assistance, and public administration combined) expanded 0.3% in January, up for the 12th consecutive month as all components increased

Source: Statistics Canada
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After four consecutive months of improvement, household confidence faltered somewhat in March, settling at a level slightly below its long-term average.

Households have revised downwards their expectations of the general economic situation over the next twelve months and expressed growing fears of a rise in unemployment.

On the personal level, households have stepped up their saving intentions, while expectations of their own financial situation remain basically the same.

Source: National Bank of Belgium
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The moves underscore how housing markets are adjusting to rising interest rates as central banks try to contain inflation. Policy rates have increased on average by 4 percentage points across major economies, to levels that prevailed prior to the global financial crisis.

In the United States for instance, the Federal Reserve has increased the target rate to a range of 4.5–4.75 percent from near zero a year ago, the fastest pace of rate increases in two decades. This in turn led to a sharp increase in the average 30-year fixed mortgage rate, which rose to a two-decade high of 7.1 percent late last year.

Interest rates play a critical role in driving house prices, along with income and population growth on the demand side and various supply factors like construction costs and regulations. A rule of thumb based on cross-country evidence is that every 1 percentage point increase in real interest rates slows the pace of house price growth by about two percentage points.

Prior to the recent tightening cycle, interest rates had been on a downward trend. Lower rates rationally led to an increase in housing demand by lowering the cost of borrowing to finance the purchase of a house or to build on to existing houses. Now the process has been thrown in reverse. Every percentage point increase in the mortgage rate raises monthly interest payments for the average US homebuyer by $100, and the impacts can be more dire for buyers in countries with a predominance of adjustable rate mortgages.

How long the decline in housing prices continues will depend on whether the rate hikes by central banks have already curtailed inflationary pressures. The IMF’s latest World Economic Outlook update forecasts inflation to be lower this year than it was in 2022 for about 85 percent of countries. Global inflation is expected to slow from almost 9 percent last year to about 6.5 percent this year and decelerate further next year, driven by the impact that rate hikes have already had on easing the imbalances between demand and supply.

If central banks slow or pause rate hikes, housing prices should then see greater stability.

Source: IMF BLOG – Hites Ahir, Prakash Loungani, Karan Bhasin
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The National Bureau of Statistics stated that in the months of January and February, industrial profits fell 22.9 percent annually. The decline came after a contraction of 4.0 percent for the entire year of 2022.

Despite the restrictions being removed at the end of 2022, data revealed that factories have not yet recovered from the pandemic-driven slowdown.

After falling by 0.8 percent in January, factory gate prices fell by 1.4 percent annually in February. Factory revenues and profits are still being negatively impacted by declining producer prices.

Source: RTT NEWS
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.