Release date 11 February 2022
December’s industry data surprised even the biggest optimists
The total value of industrial production was higher for the fifth month in a row. In December 2021 it was higher by 1.1% compared to November. It was higher in manufacturing and mining (by 1.1% and 16.0%, respectively) and lower in electricity, gas and steam supply sector, mainly due to poorer hydrology (by 2.4%). Growth surprised us, especially after the already strong growth in November (+ 2.8% compared to October, based on seasonally adjusted data) and compared to the usual situation in this month in the last few years. We expected a moderate, 0.3% drop. Compared to the level of industrial production in December 2020, it was higher by 11.9% and compared to December 2019 by 10.3%. Despite the growth of production in manufacturing (+1.1% compared to November), turnover in December decreased by 0.5%, which is related to the higher growth in stocks of finished products. At the annual level, turnover was up by 15.1% in December (15.4% for the whole year), which means that it exceeded production growth by 3.1 percentage points. This is also a rough estimate for average growth in the price of all industrial products in 2021. The December’s value of inventories was 14.8% higher than in the previous year, and on average 5.3% throughout the year. Based on these data, we believe that at the end of the year, companies formed a higher value of inventories, which means that the challenges in continuing operations in 2022 in this regard are smaller. In terms of sector’s technological complexity of production, the growth of production in high-tech activities (+51.3%) and low-tech (+18.5%) sectors was extremely high, which is associated with the strengthening of the domestic pharmaceutical and wood industry.
More economic topics are below in the attachment.
CPI in the USA rose by 0.6% in January compared to December, which was once again a faster monthly rise than in the EU-27 (+0.3%). Compared to January 2021, prices were higher by 7.5% (in the EU-27: +5.1%). The US Department of Labor also reported CPI for people living in cities and clerk workers, where prices rose even more on an annual basis (+ 8.2%). Food, electricity and residential real estate prices contributed the most to the monthly rise in prices. Food prices were up 0.9% on a monthly basis (up 0.5% in December) and energy prices up by 0.9% (rising electricity prices mitigated the fall in oil and natural gas prices). For the US Federal Reserve, the relevant index is the price index, which excludes food and energy prices (representing 79% of the price basket). This increased by 0.6% on a monthly basis and by 6% on an annual basis. It is important to point out that residential real estate accounts for one-third of the U.S. consumer basket and covers both the cost of rent and the implicit change in rental price for property owners. Expenditure on energy accounts for 7% of the U.S. basket and food 13.4%. More details available at: https://www.bls.gov/cpi/.
Large manufacturers of electronic equipment are still recording growth in business and new orders, which is slightly lower than in 2021. They even raised their optimism slightly (56.5) compared to December (56). The lack of sufficient capacity still limits business growth. Sales prices rose again as quickly as in November, reflecting a renewed wave of pressure on input prices.
Debt: The eye of the storm – the 24th Geneva Report on the World Economy; Laurence Boone, Joachim Fels, Òscar Jordà, Moritz Schularick, Alan M. Taylor; voxEU; 9 February 2022. Available at: https://voxeu.org/article/debt-eye-storm
Comment/Abstract: This huge debt boom is the flip side of the surge in gross savings and the multiplication of financial wealth experienced in recent decades. If we look at the asset side of balance sheets, we find that, relative to their income, households have never been wealthier. In light of this wealth boom, researchers are surprised as to why households are not consuming more. Perspective thus matters in understanding why societies are accumulating – that is, both issuing and acquiring – debt in all its forms at such high rates. As long as credit supply remains plentiful relative to debt issuance, and thus interest rates remain low, higher levels of debt appear sustainable. As the interest cycle is turning, the largest risks are concentrated in emerging economies where households and corporates have leveraged up substantially. China’s transition from financial boom to bust is a particular risk factor.
Consumer confidence, Slovenia, January 2022, (18 February), Statistical Office of RS; +2
Comment: After a gradual stabilization of confidence in recent month, we expect a mild uptick, reflecting a one-off fiscal measure for pensioners and expectation on reduction of some containment measures what was publicly indicated. On the other hand, has the inflation the potential to put a pressure on this indicator, so our estimate is quite risky.
“The most reliable way to predict the future is to create it.”
(Abraham Lincoln)