UK Unemployment/Wages (Feb) – 18/04 – the only silver lining with respect to the soaring cost of living has been a low unemployment rate of 3.7%, and wages data that has by and large held up reasonably well.
In January, average wages excluding bonuses fell back from 6.7% to 6.5%, and look set to remain reasonably well supported, however with prices heading in the opposite direction the outlook for the UK consumer remains challenging. The Bank of England may like to think that it can hold off from another rate hike when it meets next, however, if this week's wages and inflation data remains solid then the likelihood of another 25bps rate hike when the Bank of England meets in May seems more than probable.
China Q1 GDP – 18/04 – - after such a poor performance in 2022, Chinese leaders appear to be adopting a more pragmatic approach when it comes to this year's targets for economic growth.
Last year's lockdowns hobbled any prospect of hitting the 5.5% target set a year ago. This year's target of 5% was much more conservative probably set on the basis that it's easier to hit a lowball target than over-promise. In Q4 the Chinese economy stagnated equating to annual GDP growth of 3%. Even this seems highly dubious when looking at the breakdown of retail sales and industrial production data, nonetheless, for Q1 we can expect to see a reasonable rebound given the gradual relaxation of restrictions that have taken place since December, along with Chinese New Year which saw a limited return to normal. Q1 GDP is expected to come in at 2.1%.
China Retail Sales (Mar) - 18/04 – Chinese retail sales slowed markedly towards the end of last year, contracting every month of Q4, even in December when restrictions started to get lifted.
Online retail sales have held up well, in December they rose by 17.2% even as the monthly numbers showed a decline of -1.8%. In the numbers for January and February, we did see a modest improvement which also accounted for the period of Chinese New Year. The latest trade numbers showed a sharp improvement in both exports and imports which suggested that internal demand was recovering strongly. This is expected to carry over into the March numbers with an expectation of a gain of 8%. Industrial production is expected to rise by 4.7%.
UK Retail Sales (Mar) – 21/04 – after a disappointing end to 2022, consumer spending has picked up quite nicely in the first 2 months of 2023.
In January retail sales rose 0.9% while the expectation was that we'd see a slowdown in February in the face of soaring food price inflation. What we in fact saw was a better-than-expected rise of 1.2%, although volumes were down from the year before with consumers having to contend with having to pay higher prices to get the same thing. The broader picture for consumer spending is still subdued but it has been notable that consumer confidence has been improving from the record lows seen at the end of last year. What may also be helping is that having seen such a bleak autumn and energy prices that were actually lower than expected consumers have slightly more disposable incomes to spend on treats like short breaks as well as looking ahead to spending money on a summer break. Having seen such a strong start to the year for retail sales it is quite likely that March might see a slowdown, but all in all the omens do look good for the UK economy to bounce back in Q1, after the 0.1% GDP gain seen in Q4.
Deliveroo Q1 23 – 20/04 – the last few earnings updates have seen Deliveroo move a great deal closer to their target of breaking even as well as making a profit, although you wouldn't know it to look at the share price performance.
It does appear to have found a base around the 80p level, however, that's well below the 390p IPO price. Full-year revenue from last year rose by 14% to £1.97bn, on continuing operations, despite a 2% decline in global orders. GTV rose 9% to £6.85bn. Having exited the Dutch and Australian markets there has been a much tighter focus on costs, and without those businesses adjusted EBITDA is expected to improve from a £45m loss last year to be in the region of between £20m and £50m profit, albeit weighted towards the second half of this year.
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