Release date 25 February 2022
The synchronous withdrawal of most containment measures raises optimism in service activities
The economic climate in Slovenia improved as expected in February 2022, mainly due to the predominant removal of restrictions that negatively affected some service activities (tourism, travel, sports, culture). It was 1.2 percentage points higher on a monthly basis (we expected an increase of 0.3 percentage points) and 10.1 percentage points higher on an annual basis. The monthly change in the sentiment indicator was positively influenced by higher values of consumer confidence indicators (by 0.6 percentage points), in services (by 0.5 percentage points) and in manufacturing (by 0.2 percentage points). The impact of confidence indicators in retail trade and construction was negative, but the impact was small (0.1 percentage point each).
Even though January price growth (HICP methodology) in Slovenia (6%) was slightly higher than in the euro area (5.1%), the annual change in prices across major individual categories (12) was quite different. Prices of healthcare (goods and services) in Slovenia were up by 5.9% year on year, in the euro area by only 0.8% (5.1 percentage points difference), and prices in the transport category increased much more (in Slovenia: +14.3 %, in the euro area: +9.4%). In the category of housing equipment, higher growth in Slovenia was also remarkable (6.6% versus 2.8%). In the hospitality sector, prices in Slovenia also increased (+6.8%) more than in the euro area (4.1%). On the other hand, prices in the communications in Slovenia decreased (-4.4%) more than in the euro area (-0.4%). A key contribution to these differences was made by higher prices of services in Slovenia, which were higher by 3.5% on the annual level (+2.3% in the euro area). The prices of electricity, gas, coal and district heating in Slovenia increased by half less (+15.8% versus +31.2%), which means that we will still see an increase in prices in this category in the coming months. The increases in liquid fuel prices were similar (+27.5% in Slovenia, +25.9% in the euro area).
More economic topics are below in the attachment.
In the USA, the optimism in service activities improved for second month in a raw, rising from 51.2 to 56.7. It also improved in manufacturing (from 55.5 to 57.5). Bottlenecks have also been reduced in US ports, contributing to faster output growth. US buyers (mostly distributors) rushed into purchases in anticipation of higher future prices, which has further contributed to the growth in demand in the industry. Higher costs of raw materials, transport services and wages raised the rate of input inflation again. Higher sales prices were forecast for both US manufacturing and services, with services standing out. In February, the number of months when employment increased, rose to 20. In particular, employment strengthened in service activities.
Austrian PMI in manufacturing fell slightly in February to 58.4 (our estimate was at 59) compared to January (61.5), due to slower production growth (increased absenteeism of employees) and slower order growth. Nevertheless, employment has risen sharply again. Input and production prices rose slightly less than in previous months, with the release of bottlenecks being a key factor. Around 42% of companies still reported delays in deliveries, the lowest share since January 2021.
Inflation, market power, and price controls: Views of leading economists; Romesh Vaitilingam; voxEU; 25 February 2022. Available at: https://voxeu.org/article/inflation-market-power-and-price-controls-igm-forum-survey
Comment/Abstract: With sharply rising US inflation prompting debate about the potential role of powerful firms in driving up prices and whether antitrust interventions and/or price controls may be an effective policy response, the IGM Forum at Chicago Booth invited its panel of leading US economists to express their views. As this column reports, few think that dominant corporations in uncompetitive markets are a significant factor in rising prices; and asked whether antitrust interventions could reduce inflation, more than four in five experts disagree. A smaller majority disagrees with the proposition that 1970s-style price controls could reduce inflation, but even those who say that they might work don’t necessarily think that reintroducing them should actually happen.
GDP, Slovenia, 2021/2020, (28 February), Statistical Office of RS; +6.7%
Comment: We increased our GDP estimate from 6.3% to about 6.7%, mainly due to better than expected December economic data.
“The most reliable way to predict the future is to create it.”
(Abraham Lincoln)