Weekly Economic Highlights: November’s growth in industrial production well above expectations

16_1_2022_Weekly Economic Highlights

Release date 16 January 2022

November’s growth in industrial production well above expectations

On Slovenia's Economy

  • The total value of industrial production in Slovenia in November 2021 was 2.8% higher than in October 2021, which was significantly higher than we expected (no change compared to October). It was higher in manufacturing and mining (by 3.2% and 2.6%, respectively), and lower in energy (by 2.9%), mainly due to poorer rainfalls. Compared to November 2020, it was higher by 10.1% and compared to November 2019 by 8.7%. Price growth has accelerated. Total turnover (sales) increased by 4.3% in November compared to October (by 4.2% in manufacturing), of which it increased by 7.3% on the domestic market and by 4.3% on the foreign market. At the annual level (compared to November 2020), it was higher by 17.0% and compared to November 2019 by 15.1%. By sectors, the growth of industrial production on a monthly basis was highest in the production of beverages (+ 20%; annually: + 42%) and clothing production (+ 14%; annually: + 33%), leather products production (+ 8%), production of electronic and optical products (+ 20%; annually: +34%) as well as in the manufacture of motor vehicles (+ 9%, annually: -10%). Declines were seen in woodworking and processing (-7%; annual: + 18%), food production (-2%; annual: + 10%) and other miscellaneous activities (-9%; + 46% per annum). The growth of industrial production in the first 11 months was also extremely high y-o-y. It was higher than 20% in eight sectors (textiles, chemicals, metal products, electrical appliances, motor vehicles, furniture, other miscellaneous activities, repair and installation of machinery).

  • In the Q3 2021, freight motor vehicles registered in Slovenia carried 8% more goods than in 2020 and made 6% more kilometres. They transported 62% of all goods in domestic transport (7% more than in the same quarter 2020), and 9% more in international transport. Compared to the pre-crisis period (Q3 2019), the growth of goods throughput was higher by 14%, of which 22% higher domestically and 2.6% higher internationally. Extremely high growth in domestic transport compared to this period is due to the growth of industry, construction and trade, which are all sectors that use services of road freight transport.

  • More economic topics are below in the attachment.

On World Economy

  • CPI growth in USA was the highest since 1982, reaching 7% year on year in December (core inflation 5.5%). Surprisingly, clothing prices rose (by 1.7% compared to November). Prices of vehicles, accommodation costs and food were also higher. Recreation and fuel prices have fallen. A survey by the Association of Independent Businesses showed that the share of companies that will raise prices is the highest in the last 40 years. There is also a record high share of companies that will raise prices in the next three months. Year-on-year price growth should slow in the coming months but is unlikely to fall below 3% in 2022. This estimate includes the expectation that raw material supply will improve from the summer onwards, and that price should fall in some categories (e.g. used vehicles). Risks to sustaining high price growth are associated with rising labour costs, corporate price strength and restrictive measures in Asia, which weaken the production of industrial and consumer goods destined for world markets.

  • More economic topics are below in the attachment.


Must Read of the Week

  • Zombies on the brink: Evidence from Japan on the reversal of monetary policy effectiveness; Gee Hee Hong, Deniz Igan and Do Lee; BIS Working Papers No 987; 11 January 2022, free download at: https://www.bis.org/publ/work987.htm

Comment/Abstract: Authors found out that Japanese firms increase investment in response to lower term premia. But this response comes primarily from healthy firms. By contrast, zombies seem to respond to monetary easing by financial restructuring. They basically replace short-term debt with long-term debt. That way, they take advantage of lower long-term yields without increasing investment. Unconventional monetary policy might have a diminishing effect on firm investment in an economy with many zombies.

Forecast of the Week

  • Number of working persons, Slovenia, November 21 (Statistical Office of RS); 914,000

Comment: We expect number of jobs to reach new high in November 21, rising by 2,200 compared to October 21.      


Quote of the Week

“Learn from the past of you want to predict the future.”

Please see the enclosed attachment