Data Interpretation

Data released on February 21 revealed that France's Composite PMI fell to 44.5 in February, marking a 17-month low. The Manufacturing PMI rose to 45.5, a nine-month high, while the Services PMI declined to 44.5, also a 17-month low. The private sector economy in France contracted further in February, with the pace of business activity contraction accelerating to its fastest since September of the previous year.

The February PMI data for Japan indicates an accelerated expansion in private sector economic activity, with the composite PMI reaching a five-month high. While the service sector continued to expand, the manufacturing sector remained weak. Business confidence declined to its lowest level since 2021, reflecting the impact of inflation, labor shortages, and economic uncertainty.

The latest data on Australia's February PMI reveals an accelerated pace of expansion in private sector business activities, with a further increase in the growth rate of the services sector. However, manufacturing growth remains sluggish. Despite continued growth in the job market, business confidence in future economic prospects has declined, while inflationary pressures persist.

On February 20, the Federal Statistical Office of Germany (Destatis) released the Producer Price Index (PPI) report for January, showing a YoY increase of 0.5% and a MoM decline of 0.1%. Higher prices for non-durable consumer goods were the main reason for the year-on-year increase in producer prices. Capital goods and durable consumer goods were also more expensive than in the same month of the previous year, while energy and intermediate goods were less expensive.

The UK inflation rate surged to its highest level in 10 months, driven by rising food and airfare prices, as well as the introduction of value-added tax (VAT) on private school fees. According to the Office for National Statistics (ONS), the Consumer Prices Index (CPI) rose by 3.0% YoY in January, exceeding the 2.5% increase recorded in December. This outpaced economists' and the Bank of England's (BoE) expectations of a 2.8% rise, potentially reinforcing the central bank's cautious stance on interest rate cuts aimed at stimulating economic growth.

The Reserve Bank of New Zealand (RBNZ) has warned of risks from global trade frictions, geopolitical shocks, and U.S. tariff policies. It emphasized its readiness to respond flexibly to potential shocks to ensure medium-term inflation stability and economic resilience.

Canada's Consumer Price Index (CPI) for January marked the sixth consecutive month below the central bank's target. However, the Bank of Canada (BoC)'s core CPI rose to 2.1%, signaling underlying stickiness. The rebound in energy prices offset the historic decline in food prices driven by the sales tax holiday. Meanwhile, the slowdown in housing cost growth remained a key driver of inflation. This highlights the "mixed" nature of the economy, with market expectations suggesting that the Bank of Canada will hold interest rates steady in March, potentially initiating a gradual rate cut in the second quarter.

The US January PPI was higher than market expectations. However, the decline in prices of some sub-items related to the core Personal Consumption Expenditures (PCE) alleviated market concerns about inflation. After the release of the PPI data, US Treasury yields declined, and the market expects the Federal Reserve to cut interest rates by 33 basis points this year. Although inflation data still shows resilience, the moderate growth of core indicators reduces the possibility of further interest rate hikes.

Australia’s January PMI data indicate a slight economic recovery, with improvements in both the services and manufacturing sectors. However, inflationary pressures and supply chain issues persist. Strong employment figures and increased consumer spending suggest potential rate cuts by the Reserve Bank of Australia as inflation eases.