“German Inflation…”

Consumer prices in Europe’s largest economy were mostly driven by the soaring cost of energy and food, lifting inflation 0.4 percentage points from July despite recent government measures to cushion the blow for households.

German Inflation

German inflation in August, rose to its highest level in almost 50 years showed data on Tuesday setting a case for the ECB to increase interest rates by a larger basis-point next month.  The federal statistics office said on Tuesday, that consumer prices harmonised in line with inflation data from other European countries (HICP) increased by 8.8% on the year, following an unexpected 8.5% increase in July.  The increase came along irrespective of government measures that were meant to combat inflation.  These measures which are meant to halt by end of August include cheaper public transit tickets and a fuel tax cut.   The ECB has already raised its deposit rate by 50 bps to zero in July and is similarly is expected to do so in September, although there some policymakers made the case for a 75 bps increase.  At the current rate of 8.9%, inflation, is already four fold higher than the 2% ECB threshold and could also exceed the 10% in the coming months.  The primary driver for increased inflation has been higher energy prices as a result of the war in Ukraine. Evidence of this are August’s energy prices which are higher by 35.6% than the same month last year. 

US Private Payrolls

US private payrolls edged higher in August by 132,000 after an increase of 127,000 in July, according to an ADP National Employment report.  The report was published ahead of the BLS’ closely watched employment report for August that is published on Friday.  Labour demand remains robust despite the aggressive pace at which interest rates are being increased to combat inflation.  Meanwhile, government data on Tuesday showed that there were 11.2 million job openings on the last business day of July, with two openings for every unemployed person.

China’s industrial profit for July

China’s industrial firms encountered a reduction in profits in July amid lower demand from COVID-19 curbs that negatively impacted factory margins.  Furthermore, power shortages due to heatwaves threatened production.  The National Bureau of Statistics said on Saturday that profits at China’s industrial firms dropped by 1.1% in January to July from a year earlier, offsetting a 1% growth during the first six months.  Meanwhile, also in July, China’s industrial output growth slowed to 3.8% year on year from 3.9% in June. The statistics bureau also showed that liabilities at industrial firms jumped 10.5% from a year earlier in July, in line with the same increase in June.  The industrial profit data covers large firms with annual revenues of greater than $3 million from operations.  China’s economy has slightly escaped a contract in the second quarter of this year due to COVID restrictions and a distressed property sector that affected demand.

Oil

Oil prices increased by more than 4% on Monday, extending the gains of last week, amid the possibility of output cuts by OPEC+ and the conflict in Libya that helped to offset the impact of a strong dollar and a gloomy US growth.  OPEC+ that includes OPEC, Russia and allied producers will meet on 5 Sept to set the policy.  Brent crude reached $105.09 a barrel, higher by 4.1% having increased by 4.4% last week. Nonetheless, US West Texas Intermediate (WTI) crude gained 4.2% to $97.01 after climbing by 2.5% last week.  According to the head of the International Energy Agency, nations that are members of the International Energy Agency could release more oil from strategic petroleum reserves (SPR) if they find it necessary when the current scheme expires.  Meanwhile, OPEC+ said in report on Wednesday said that the oil market will likely see a bigger than expected surplus this year, as the rising energy costs and tighter monetary policy place downward pressure on oil demand. 

Thursday saw oil prices tumbling by more than 3% amid new COVID measures in China raising fears of higher inflation and interest rate hikes that could negatively impact the demand for fuel.  Brent crude dropped by 3.4% to $92.36 a barrel while US West Texas Intermediate crude futures dropped by 3.3% to $86.61 per barrel. 

Malta: Unemployment Rate

A press release dated 30^th August by the National Statistics office shows that in July, 2022 the monthly unemployment rate was 2.9% in line with that of June, 2022.  While the rate for males was 3.1%, the female rate stood at 2.6%.  The number of unemployed persons was 8,325 during the month of July, with those in the 25 to 74 age group being the largest group contributing to the overall level of unemployment at 5,645 while the number of unemployed youths amounted to 2,680. 

Malta:  Gross Domestic Product – 2^nd Quarter 2022

A press release by the National Statistics office dated 29 August, 2022 shows that provisional figures indicate that the Gross Domestic Product (GDP) for the second quarter of 2022 amounted to EUR 4,100.4 million, registering an increase of EUR526.6 million or 14.7% in comparison to the same quarter of 2021.  Meanwhile, in volume terms, GDP rose by 8.9%. 

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