Economy in Brief

• Decline is broad-based.
• Weakness is led by lower vehicle sales.
• Overall decline is muted by higher gasoline spending.

• Jan. IP +0.5% (+2.0% y/y) following +1.0% (+0.5% y/y) in Dec.; IP Index highest since Sept. ’22.
• Mfg. IP -0.1% m/m, led by a 5.2% decrease in auto production (w/ durable goods virtually unchanged and nondurable goods down 0.3%).
• Utilities output jumps 7.2%, the largest m/m rise since Feb. ’21, while mining activity falls 1.2%, the fourth m/m decline in five months.
• Key categories in market groups mostly increase.
• Capacity utilization rises to a 5-month-high 77.8%.

• Inventories slip, paced by retailer & wholesale sectors.
• Sales improvement is broad-based.
• Inventory/sales ratio falls.

• Import prices drift higher in January, as a jump in petroleum prices offset cooling in the auto sector.
• Oil prices also led the increase on the export side.

Recent weeks have brought significant shifts in financial market sentiment, reflecting changes in consensus views about the global economy. The latest Blue Chip Economic Indicators survey highlights the United States as a standout performer, with forecasters maintaining resilient growth forecasts compared to the rest of the world (chart 1). However, escalating concerns over US trade policy have led to sharp downward revisions in growth expectations for large open economies such as South Korea in recent months (chart 2). Inflation pressures also remain a key concern, which may have been amplified by the firmer-than-expected January US CPI data that were published this week (chart 3). CPI forecasts for most major economies, for example, have generally been climbing in recent months (chart 4). A notable exception is China, where inflation forecasts have continued to decline, and to worryingly low levels. Meanwhile, with Fed Chair Powell also signalling this week that the US central bank is in no hurry to cut interest rates, interest rate differentials remain a delicate balancing act for policymakers in many economies, particularly in Asia (chart 6). Recent financial market volatility certainly underscores the fine line central banks must tread as they navigate global economic uncertainties, including protectionist US trade policies and the ripple effects of shifting US monetary policy.

• Energy costs drive overall price increase.
• Core goods price gains are minimal.
• Services price gains are solid.

• Initial claims hold tight range.
• Total beneficiaries decreased in February 1 week.
• Insured unemployment rate remains at 1.2%.

• Personal income tax receipts pick up.
• Outlay growth remains strong.