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BOV Market Watch - Week ending 17th September 2021
17 Sep 2021
Eurozone Industrial Production Recovers in July. Eurozone industrial production increased in July after falling for two straight months. Industrial output grew 1.5 percent on a monthly basis, much better than the 0.6 percent forecasted growth, reversing a 0.1 percent fall in June and 1.1 percent decrease in May. All components of production except energy logged a monthly growth in July. On a yearly basis, industrial production growth slowed to 7.7 percent in July from 10.1 percent in June.  Production in the EU27 grew 1.4 percent on a monthly in July taking the annual growth to 8.3 percent.

U.S. Industrial Production slows in August
. U.S. industrial production increased by 0.4 percent in August, following a 0.8 percent growth in July. The U.S.  Fed noted that late-month shutdowns related to Hurricane Ida held down the gain in industrial production by an estimated 0.3 percentage points. Meanwhile, with the Delta variant causing disruptions to global supply chains and Hurricane Ida weighing on oil production, a further slowdown in the U.S.  looks likely in September. The Fed also reported U.S, that  capacity utilization for the industrial sector edged up to 76.4 percent in August from 76.2 in July. Capacity utilization in the utilities sector jumped to 75.6 percent and capacity utilization in the manufacturing sector inched up to 76.7 percent, while capacity utilization in the mining sector fell to 76.1 percent.

China’s August Retail Sales Growth Slows Sharply.
China’s August retail sales grew at a much weaker pace, as the outbreak of Delta variant weighed on consumption, and industrial production growth softened amid supply chain bottlenecks and higher raw material cost. Retail sales grew only 2.5 percent on a yearly basis, which was much weaker than July's 8.5 percent growth and the expected rate of 7 percent. Industrial production grew moderately by 5.3 percent year-on-year in August, slower than the 6.4 percent increase seen in July and the forecasted of 5.8 percent. During January to August period, fixed asset investment increased by 8.9 percent, slightly lower than the 9 percent expected after rising 10.3 percent in January to July period. In the first eight months of 2021, property investment grew 10.9 percent from the last year. It is expected that any near-term virus-linked disruptions should prove temporary.

Italy’s Inflation Increases Less Than Expected.
Italy's consumer price inflation increased less than estimated in August, final estimates from Istat showed. Consumer prices increased by 2.0 percent on a yearly basis in August, marginally lower than 2.1 percent forecasted and following a 1.9 percent rise in July. On a monthly basis, consumer prices rose 0.4 percent in August. The core inflation rose to 0.6 percent in August, same as in the prior month, and as forecasted.

U.S. Consumer Price Growth Slows.
The U.S. Labour Department reported that its consumer price index rose by 0.3 percent in August, lower than 0.4 percent expected and after climbing by 0.5 percent in July. This consumer price growth was partly due to another sharp increase in energy prices, which spiked by 2.0 percent in August after jumping by 1.6 percent in July. Excluding food and energy prices, core consumer prices inched up by just 0.1 percent in August, lower than the 0.3 percent increase expected, and after rising by 0.3 percent in July.  Higher prices for household operations and accommodation contributed to the uptick in core prices, which reflected the smallest increase since February. The report also showed a slowdown in the annual rate of consumer price growth, which dipped to 5.3 percent in August from 5.4 percent in July.  The annual rate of core consumer price growth also slowed to 4.0 percent in August from 4.3 percent in the previous month. Price increases due to ongoing supply chain bottlenecks amid strong demand will keep the rate of inflation elevated until the pressing supply/demand imbalances are gradually resolved.
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Bank of Valletta p.l.c. is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap. 371 of the Laws of Malta) and the Investment Services Act (Cap.370. of the Laws of Malta).