Many higher costs start today
For the video brief (and to play in the non-farm sweepstake) please click here.
Rising costs come into force today
Energy prices, national insurance, water, Council Tax, postage charges are all set to rise as we are all set to suffer the higher costs.
The British Chambers of Commerce reported that 62% of UK businesses expect to increase prices in Q2 as supply of raw materials and spare parts are still challenging and the wider cost base is still rising.
We are warned of a pretty significant slump in activity in Q2 and recession does remain a risk, but this is not the expected outcome for many economists.
In the market the outlook for Sterling suggests we may lose more ground against the dollar as the two economies diverge. That is a longer term outlook and will need global risk appetite to settle down, which in turn will need an end to the war in Ukraine.?
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US adds to the oil supply
Biden is doing his bit to help with energy prices. He signed off on an extra one million barrels of oils per day to be released from the country’s strategic reserve, but today is all about non-farm payrolls though.
ADP private sector employment beat forecast at 455k this week while weekly jobless claims missed at 202k new claims and non-farm payrolls are forecast at 490k new jobs this month.
ECB policy outlook remains a little confusing
It is becoming harder to take Christine Lagarde seriously. She believes that the Eurozone needs support to ensure economic growth, almost at the expense of inflationary considerations but inflation is not just a factor of current global activity, created by the pandemic and exacerbated by the conflict in Ukraine.
With so many additional factors, like Russia’s demand that it be paid for energy supplies in its own currency, until supplies of raw materials and spare parts return to normal it is a hard task to call the future direction of the economy, inflation of interest rates.
ECB’s Chief economist Philip Lane hinted yesterday that the market shouldn’t necessarily expect a rate hike this year, regardless of the effect this may have on the Euro because with the Fed and the BoE already tightening policy we may see the euro test 1.10 against the dollar and 1.23 against Sterling.