Release date 3. January 2023
End of year data largely optimistic
After reaching the trough in October (-5.3), the economic sentiment index (ESI) strengthened in Slovenia for the second month in a row in December, to a value of 0.8. Its growth was influenced by the improvement of all indicators. In two months, retail trade strengthened by 10 points, consumer confidence by 7, confidence in manufacturing and service activities by 6 points (their impact was greatest due to the composition of the economic climate indicator) and in construction by 5 points. A slightly closer look at the individual questions within five questionnaires reveals that in manufacturing, the expected production (+11) and exports (+8) increased again, while it is positive that stocks of finished products decreased (-3). Order book shrunk by 1 month (from 5 to 4), which means that the company's production will become less stable. In services, assessment of employment growth (+8), assessment of the business situation (+5) and expected demand (+5) improved. December’s confidence indicator was significantly higher than the long-term average in retail trade (+12), construction (+34) and services (+10). In manufacturing, it was lower by 3, and consumer confidence was lower by 9 points. Source: Statistical Office of the Republic of Slovenia
According to provisional data, the consumption of electricity in the first 11 months in Slovenia was lower by 2.2% (of which in business sector by 1.2%, in households by 4.6%). It has been decreasing since April 2022 (-2.0%), and by October the year-on-year drop in consumption deepened to 8.7%, mainly due to high prices on the wholesale market and warmer autumn and winter, which reduced household consumption as well as a more rational use of energy. In November, the year-on-year drop in consumption amounted to 7.5%, of which 7.6% for households and 7.4% for businesses. Among the largest business sectors, consumers of electricity in manufacturing activities (-5.5%) contributed most to the overall drop in consumption in 11 months. Hospitality (+24.5%) and real estate (+4.7%) contributed the most to the lower drop of consumption growth. Retail and wholesale trade used approximately the same amount of electricity as in year 2021. The year-on-year drop in consumption deepened year-on-year in November in manufacturing (-9.9%) and in mining (-20%). In health care and social care (the 7th most consuming sector in terms of electricity consumption), November’s consumption was 2.2% higher year-on-year (3.8% in the 11 months of 2022). The consumption of natural gas followed the lower consumption of electricity for mainly similar reasons and was 11% lower year-on-year in 11 months. Big annual drops were especially recorded in October (-30%) and November (-17%). Source: Statistical Office of the Republic of Slovenia
More economic topics are below in the attachment.
The Composite Standard Container Shipping Index was down 77% annually on December 22, with the Shanghai-Rotterdam container rate down 87% ($1,700 per standard container) and Shanghai-Genoa down 78% ($2,880). On the other hand, the price of transportation between Rotterdam and New York increased by 11% to USD 7,000 per container. Source: S&P Global, Drewry
The composite PMI in the euro area rose to 48.8 in December (services: 49.1 and manufacturing: 47.8), indicating low but probably still slightly positive economic growth. The manufacturing PMI rose to 47.9, which was a 6-month high. Business costs rose at the slowest pace in 18 months, driven by weaker demand growth and improved semi-finished product availability. The number of jobs increased slightly. In particular, the composite PMI improved strongly in Germany (from 46.3 to 48.9), while it fell slightly in France, from 48.7 to 48.0. The chemical, plastics and basic materials industries were the sectors that also recorded a lower than usual production in December. In the financial services and transportation sector, performance was also lower than usual. In sectors related to the consumer (tourism) and consumer goods, optimism strengthened somehow. Expectations of lower inflation have strengthened, which is a positive sign, and efficiency of deliveries across value chains is highest in the last two years. Source: S&P Global
Monetary Policy and Credit Card Spending; Grigoli, Francesco; Sandri, Damiano; IMF Working Papers No. 22/255; 16 December 2022. Available at: https://www.imf.org/en/Publications/WP/Issues/2022/12/16/Monetary-Policy-and-Credit-Card-Spending-527011
Comment/Abstract: Authors analyze the impact of monetary policy on consumer spending using credit card data. Because of their high frequency, these data improve identification and allow for a precise characterization of the transmission lags. They find that shocks to short-term interest rates affect spending much more rapidly than shocks to longer-term interest rates. They also detect significant asymmetries. While interest rate rises are contractionary, interest rate cuts are unable to lift spending. Finally, by exploiting the disaggregation of credit card data, they uncover considerable heterogeneity in the effects of monetary policy across spending categories and a stronger impact on higher-income users..
HICP, EA-19, December 2022, (6 January 2023), Eurostat; 9.6% annually
Comment: We expect the HICP to come down from 10.1% in November to 9.6% in December which is just below the current (2 Jan. 23) Reuters consensus (9.7%).
“Facts do not cease to exist because they are ignored.”
(Aldous Huxley)