Macro Snapshot – UK factory output slow; Germany on the edge of recession; Japan cuts GDP by 2%
Cairo: Britain’s factory output held steady at the slowest pace in more than a year as inflation continued to rise, with Germany’s business morale falling below expectations this month. US economic growth in the U.S. slowed but was deemed ‘essential’ by Treasury Secretary Janet Yellen; Japan slashed its GDP to 2.0 percent due to a fall in global demand.
UK factory production slows, price pressure at its peak – CBI
British industrial output grew at its slowest pace in a year in the three months to July, but there are tentative signs that some challenges around inflation and investment are easing, a survey by the Confederation of British Industry showed on Monday.
The Bank of England’s monetary policy committee will have to decide next week whether to pick up pace with the rare half-point rate hike to accelerate interest rate momentum to tackle the highest inflation in 40 years.
Rising inflation has driven consumer sentiment to its lowest level since records began in the 1970s, but business activity has been slow to weaken.
Germany on the edge of recession
German business morale fell more than expected in July, the Ifo business sentiment survey showed on Monday, as the institute that compiled it said high energy prices and rising gas shortages pushed Europe’s largest economy to the brink of recession. had left.
The Ifo Institute’s closely-watched business climate index fell to 88.6 in a Reuters poll of analysts, the lowest in more than two years and below forecasts of 90.2. June’s reading was marginally revised to 92.2.
“Recession is knocking at the door. It cannot be ruled out now,” said Klaus Wohlrabe, head of survey at Ifo.
Japan cuts GDP growth forecast to 2 percent
Japan’s government cut its economic growth forecast for this fiscal year largely due to slowing foreign demand, highlighting the impact of Russia’s war in Ukraine, China’s strict COVID-19 lockdown and a weakening global economy. reduced.
The forecast, which serves as a basis for compiling the state budget and the government’s fiscal policy, included very high wholesale and consumer inflation projections in the form of increased energy and food costs and weak yen push-up prices. Huh.
The world’s third-largest economy is now expected to expand by about 2 percent in value-adjusted real terms in the fiscal year ending March 2023, according to Cabinet Office projections presented at the Economic and Financial Policy Council – the government’s top economic Panel.
It marked a sharp drop from the government’s previous forecast of 3.2 per cent growth released in January. The cut largely stemmed from weak exports, which the government expects to expand to 2.5 per cent, compared to 5.5 per cent in the previous assessment.
US economy slows, but recession not inevitable
US Treasury Secretary Janet Yellen said on Sunday that US economic growth was slowing and acknowledged the risk of a recession, but said a recession was not inevitable.
Yellen, speaking on NBC’s “Meet the Press,” said strong hiring numbers and consumer spending suggest the US economy is not currently in a recession.
US hiring was strong in June, with 372,000 jobs created and an unemployment rate of 3.6 percent. This was the fourth consecutive month of employment gains of over 350,000.
“This is not an economy that is in recession,” Yellen said. “But we are in a period of transition in which growth is slowing down and this is necessary and appropriate.”
(with input from Reuters)