UK PMI figures for February come in much better than expected
[The British Foreign Minister and the Northern Ireland Minister will hold talks with EU officials]
Spokesman for the British Prime Minister: The British Foreign Minister and the Northern Ireland Minister will hold talks with EU officials on Tuesday. The Prime Minister told cabinet ministers that intensive negotiations on the Northern Ireland Protocol are still continuing. Negotiations to preserve Ireland's place in the UK, protect the Belfast Agreement and ensure the free flow of trade in the UK's internal market have progressed, but there are still some unresolved issues.
[Service industry jobs will grow at the fastest rate since May 2022]
John Glen, Chief Economist of the Royal Institute of Purchasing and Supply: Service industry employment has grown at the fastest rate since May 2022, consumers have higher confidence in the service industry than manufacturing, and in order to improve operational capacity, The number of workers hired by the service sector is also higher. Manufacturing continues to report layoffs and cautious purchases as a result of large inventories built up last year. Firms in the services sector cited rising wage costs as a reason for the rise in inflation as a skills shortage remained widespread. With raw material costs softening again in February, manufacturers have more leeway to offer customers better prices for production orders.
[UK manufacturing output and orders fell in February]
UK manufacturing output and orders fell in February, as price pressures cooled again. Anna Leach, deputy chief economist at the Confederation of British Industry, said manufacturing conditions remained challenging, with output disappointing and orders falling since late last year. However, manufacturers need more than a winter boost from lower energy prices if the industry is to return to growth on a sustainable basis.
[UK PMI data in February was much better than expected]
UK PMI figures for February were much better than expected, pointing to encouraging resilience in the face of headwinds including rising interest rates, an ongoing cost of living crisis, labor shortages and strikes. While many companies continued to report tough operating conditions, especially in manufacturing, signs of peaking inflation, improving supply chains and easing recession risks lifted broader business sentiment. Stress from last autumn's mini-budget turmoil also continues to unleash from the financial system.
[The possibility of further interest rate hikes by the European Central Bank still exists]
The possibility of further rate hikes by the European Central Bank also remains, posing a risk to demand and economic activity. Services inflation remains stubbornly high, with both input cost inflation and output price inflation near peak levels. While continued resilience in the labor market suggests the ECB needs to do more to cool the French economy, it is uncertain how much the ECB's monetary policymakers will need to raise rates to keep inflation down.
[Investors are waiting for the minutes of the Federal Reserve meeting]
Investors await the release of the Federal Reserve meeting minutes, as investors wonder how close they are to raising rates by 50 basis points in February. Macro data show that the U.S. economy is resilient, and a strong U.S. economic outlook may require the Federal Reserve to raise interest rates further to contain inflationary pressures. Slowing inflation has fueled optimism and the Fed has continued to make dovish comments.
[Switzerland recorded the largest trade surplus since February last year]
Switzerland's trade surplus surged to its highest level since February last year in January, with exports rising 16.3% in the month while imports rose just 5.9%. While this doesn't tell much, it may indicate that seasonal factors are affecting Swiss trade, as the country's trade surplus has widened significantly over the past few months.
[How close is the Federal Reserve to raising interest rates by 50 basis points in February]
The dollar rally in February was a correction, but this week will determine whether the dollar rally goes further, and the focus of the February meeting minutes will be how close the Fed was to raising rates by 50 basis points at that meeting. Powell was quite relaxed in his press conference after the February meeting and announced that the deflationary process had begun, but the market has been sensitive to the possibility of a 50 basis point rate hike. Money markets now expect the Fed to raise rates above 5% in May, with rates peaking at 5.305% in July.
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