Aurelia Butler

“Let’s stick to the official forecast of 6.25% but I think we’ll do better,” Le Maire told BFM TV.”We will do better,” Le Maire again told BFM TV, when asked by BFM TV about a possible growth figure of 6.5 percent.Last week, France’s central bank raised its growth forecast again for 2021, to 6.7% versus 6.3% in September and 5.8% in June. More

Japanese companies have confidence in the country’s economy, according to the latest quarterly survey by the Bank of Japan, which analysts warned was conducted before most business leaders had factored in the new Omicron coronavirus variant.The BoJ’s quarterly Tankan survey showed sentiment among big Japanese manufacturers was unchanged from the previous report, as supply chain disruptions began to ease and companies felt capable of dealing with higher oil and other commodity prices. The Tankan index of sentiment among large manufacturers remained at plus 18 in December, the same level as September. Shortages of semiconductors for products ranging from cars to consumer electronics have eased following the gradual lifting of lockdowns in south-east Asia, where Japanese companies have built complex supply chains.The Tankan survey is one of the most comprehensive economic indicators in Japan and is closely monitored by economists across the world. It polls companies about whether business conditions are “favourable” or “unfavourable”, and subtracts the latter from the former to yield a reading between minus 100 and plus 100, with figures above zero indicating positive business sentiment.While sentiment has remained in positive territory for a sustained period, analysts pointed out that the report represented the mood before the effects of Omicron emerged.At the end of November, the Japanese government tightened restrictions on foreign arrivals and overseas business travel by its own citizens — a source of frustration for many companies — to help contain the spread of the virus. The BoJ said that almost 80 per cent of respondents to the Tankan survey had submitted their replies by November 29.

Sentiment in the services sector jumped, with the index rising from plus two to plus nine following the lifting of the Covid-19 state of emergency at the end of September. Retail improved from minus four to plus three.Although restaurants were allowed to sell alcohol and stay open later, analysts said people were still uneasy about dining out. Sentiment in the accommodation, eating and drinking sector rose 24 points but still languished at minus 50.The latest Tankan survey “showed that the services sector has started to narrow the gap relative to manufacturing and we think that process has further to run,” said Marcel Thieliant, senior Japan economist of Capital Economics in a note. With almost 80 per cent of the population vaccinated and infections relatively low, “the services sector should continue to recover”, Thieliant added.Carmakers such as Toyota Motor are increasing production to make up for lost output this year. The sentiment for automobiles fell slightly from minus seven to minus eight. “The decline has come to a near halt for the industry,” said Takuji Aida, chief economist at Okasan Securities. While noting robust earnings in both manufacturing and non-manufacturing industries, Aida warned that potential labour shortages risked slowing down the recovery of the service sector. More

If Jay Powell needed further evidence to bolster the US Federal Reserve’s case for scaling back its enormous stimulus programme more quickly, he secured it on Friday after the release of November’s inflation report, which showed consumer prices rising at the fastest annual pace in nearly 40 years. The consumer price index jumped 6.8 per cent in November from a year earlier and removed any doubt that ongoing price pressures are broad-based.Even before the latest inflation reading, the central bank had already changed tack, abruptly shifting from a patient approach to scaling back its ultra-accommodative monetary policy and instead assuming a much more aggressive stance against inflation. In its aftermath, the Fed appears on track to push forward with its plans.Powell laid the groundwork earlier this month, stressing it was highly uncertain when inflation would moderate next year.He also vowed to use the Fed’s tools to ensure inflation does not become entrenched — a pledge he backed up by signalling support for the central bank to wind down its asset purchases “perhaps a few months sooner” than the initial June timetable. Economists now expect the Fed to double the tapering pace and cease expanding the size of its balance sheet in March, setting the stage for a series of interest rate increases in 2022.“The Fed’s communication has been quite clear: they will speed up the tapering and the purpose is to open the door to rate hikes next year,” said Anne Beaudu, global fixed income portfolio manager at Amundi.Powell’s pivot came just four weeks after the Fed first announced that it would begin reducing or tapering its pandemic-era support. The intervening period featured a spate of strong data, including a robust October jobs report and upward revisions to August and September’s gains. Inflation numbers that made clear price pressures were expanding provoked further discussion, as did additional evidence underscoring the strength of the US consumer.“Part of the art of monetary policy is never becoming too dug in or too much in love with your prior positions. You have to adjust your stance as the facts on the ground change,” said David Wilcox, who is affiliated with the Peterson Institute for International Economics and Bloomberg Economics and used to work at the Fed. “The fact that they are doing so in a sensible manner in response to evolving evidence is exactly the way monetary policy is supposed to work.”Economists expect the Fed to alter its language surrounding inflation and officially drop “transitory” from the statement. It will also publish new insights about the possible path forward for interest rates. In September — the last time the so-called “dot-plot” of individual interest rate projections was updated — Fed officials were evenly split on the prospects of an interest rate increase next year.Loretta Mester, president of the Cleveland Fed and a voting member on the policy-setting Federal Open Market Committee in 2022, told the Financial Times earlier this month that two interest rate increases may now be “appropriate” next year, a pace James Bullard of the St Louis Fed also backs. Economists at Bank of America expect the dot plot to show two rate rises in 2022, and six across 2023 and 2024. Michael Feroli, chief US economist at JPMorgan, said the Fed could proceed at a faster clip, with one more rate increase tacked on to each year.The Fed will also release individual projections for inflation, unemployment and economic growth. In September, the median forecast indicated that the core inflation measure would steady at 3.7 per cent this year before drifting lower to 2.3 per cent in 2022. It currently hovers at 4.2 per cent, and some economists expect the 2022 forecast to move closer to 3 per cent. At 4.2 per cent, the unemployment rate has already dipped below the Fed’s median forecast of 4.8 per cent for 2021 and is inching closer to its 2022 threshold of 3.8 per cent. Aneta Markowska, an economist at Jefferies, expects it to be slashed further, with the jobless rate expected to fall to 3.5 per cent next year and 3.4 per cent the year after. Despite the improved backdrop, many economists point to the uneven nature of the labour market recovery and the enduring risk posed by Covid-19, especially in light of the new coronavirus variant, and advise the Fed to not stray too far from its patient approach.“If we have a much smaller labour force and you lock that in, you are locking in a permanently smaller economy,” said William Spriggs, an economist at Howard University and AFL-CIO, whose name has been floated as a possible contender to fill an open seat on the Fed’s board of governors.He also said raising interest rates would do little to resolve the inflation issue at hand. “You cannot control a supply shock with a demand shock tool,” he added. “If your idea is that you are going to try to raise the cost of capital and induce greater savings and lower investment, that is not how you get out of this situation.” Alan Detmeister, an economist at UBS and a former Fed staffer, said premature interest rate increases could slow hiring and cloud the employment outlook.Megan Greene, global chief economist at the Kroll Institute, is also among those to urge caution, not least because the effects of monetary policy changes take time to kick in. “Central banks by definition need to be more like tankers instead of Lamborghinis,” she said. “This pivot by the Fed feels very Lamborghini-like.” More

The cost of flying cargo around the world has reached record levels as companies attempt to meet surging demand in the run-up to Christmas.Prices have nearly doubled on key air freight routes linking manufacturing hubs in China to consumers in the US and Europe over the past three months, leaving the industry struggling to find enough aircraft to keep up.Prices on routes from Shanghai to North America reached $14 per kilogramme for the first time last week, up from $8 at the end of August and above the previous record of $12 achieved when the pandemic first hit supply chains in early 2020.There have been similar rises from Hong Kong to Europe and the US, and on the transatlantic routes between Frankfurt and North America, according to data from the Baltic Exchange Airfreight index and TAC Freight, cargo data providers.“Everyone knows if they want something on to the shelves before Christmas they have to use air freight,” said Yngve Ruud, head of global airfreight at Kuehne+Nagel, one of the world’s largest freight forwarders. Companies have been moving finished products such as fashion goods and consumer electronics by air, but also components including auto parts or semiconductors.There has also been a rush to order Covid-19 tests and personal protective equipment into Europe to deal with the Omicron coronavirus variant, according to industry executives.Supply chains have always been at their busiest during the fourth quarter because of Black Friday sales and Christmas, but the seasonal surge in demand comes with the industry under immense pressure. Companies have turned to air cargo following chaos in the shipping industry, where there is a shortage of containers and bottlenecks at ports.Half of air cargo would normally be carried in passenger jets, but many have been grounded during the pandemic, and when airlines have recommenced flying it has often been on leisure routes rather than major trade hubs. Omicron also threatens to disrupt passenger traffic.

Video: WTO director-general says supply chain problems could last months

Some airlines have switched to flying cargo and dedicated air freight companies such as FedEx and DHL have picked up some of the slack.Yet the industry is still 13 per cent down on 2019’s capacity, according to Marco Bloemen, cargo advisory lead at Seabury Consulting, an arm of Accenture.The shortfall comes as demand has risen 6 per cent over the same time, leading to a nearly 20 percentage point gap between supply and demand, Bloemen said.Even the reopening of transatlantic travel has not helped because airlines have switched aircraft back from carrying cargo to accepting passengers, and hold capacity has been limited because leisure travellers, who tend to check in multiple suitcases, have returned faster than business travellers, Ruud said.Prices between Frankfurt and North America have risen from $3.50 to $5.40 per kg since the Biden administration announced it would reopen its border to international visitors.East Midlands Airport, a major freight hub in the UK, expects to handle 470,000 tonnes of goods this financial year, up from 370,000 pre-pandemic.“Those businesses that relied on bellyhold space on passenger planes for moving goods are likely to continue to use dedicated air cargo services . . . until transatlantic passenger routes return to pre-pandemic levels,” said Clare James, the airport’s managing director.With supply chains under stress, the impact will ultimately be felt by consumers, according to Bharat Ahir, chief executive of supply chain consultancy 28one.“There are two clear impacts — availability will be lower, and what you have got is going to be more expensive,” he said. More

The cost of flying cargo around the world has reached record levels in the run-up to ChristmasYour browser does not support playing this file but you can still download the MP3 file to play locally.Read a transcript of this episode on FT.comThe cost of flying cargo around the world has reached record levels, and workers are demanding that gig economy companies explain their algorithms. Plus, the FT’s retail correspondent, Jonathan Eley, explains how the Chinese company Shein became one of the world’s biggest fast fashion companies and recently surpassed Zara to become the top fast fashion brand in the U.S.Air freight costs soar to record highhttps://www.ft.com/content/15b44fc9-5f86-4b28-ae05-a3233db13977Workers demand gig economy companies explain their algorithms – with Madhumita Murgia https://www.ft.com/content/95e7f150-b0f9-4602-8e5d-76a138b59851Shein: the Chinese company storming the world of fast fashion – with Jonathan Eley https://www.ft.com/content/ed0c9a35-7616-4b02-ac59-aac0ac154324Widening CEO-employee pay gap challenges ‘stakeholder capitalism’https://www.ft.com/content/7c9be0d8-d75b-45f3-8602-932ac25652b1The FT News Briefing is produced by Fiona Symon and Marc Filippino. The show’s editor is Jess Smith. Additional help by Peter Barber, Gavin Kallmann and Michael Bruning. The show’s theme song is by Metaphor Music. The FT’s global head of audio is Cheryl Brumley.  See acast.com/privacy for privacy and opt-out information.Transcripts are not currently available for all podcasts, view our accessibility guide. More

TOKYO (Reuters) -Japan’s core machinery orders rose in October for the first time in three months as service sector firms ramped up investment amid low COVID-19 infections, a welcome sign firms were spending and the broader economy was recovering.The world’s third-largest economy is set to post a solid rebound this quarter after a larger-than-expected contraction in July-September, although the outlook is currently blurred by uncertainties around the new Omicron coronavirus variant.Core machinery orders, a highly volatile leading indicator of capital spending in the coming six to nine months, rose 3.8% in October from the previous month, the Cabinet Office data showed on Monday.That compared with a 2.1% expansion forecast by economists in a Reuters poll and followed no change in September.Core orders from service-sector firms excluding ships and electrical utilities gained 16.5% month-on-month in October, led by transport and postal services that grew 170.1% due to large-scale orders for railroad vehicles.”As the coronavirus outbreak settled down, capital expenditure among a broad range of non-manufacturers grew,” a government official told reporters.Meanwhile, orders from manufacturers declined 15.4% from a month earlier, as decreasing demand from chemical firms offset growth from semiconductor-making equipment and production machinery companies.In a year-on-year basis, core orders rose 2.9% in October, the data showed, versus a 4.0% rise expected by economists.Companies’ capital expenditure slowed in the third quarter due to a global resurgence of COVID-19 outbreak, which particularly battered carmakers and other manufacturers dependent on parts supplies from Asian factories.While supply bottlenecks eased, the outlook on production and spending remained sluggish. The Bank of Japan’s quarterly Tankan survey on Monday showed large manufacturers’ business mood was flat in December from October, whereas sentiment among service-sector firms improved more than expected.The central bank is expected at this week’s policy review to debate whether to extend pandemic relief programmes beyond their current March 2022 deadline, although no change to its ultra-easy monetary policy is expected. More

BENGALURU (Reuters) – The European Central Bank is set to halve the amount of assets it buys each month from April, according to a Reuters poll of ECB-watchers who judged that a reprieve from high euro zone inflation by late 2022 means an interest rate rise is years away. Policymakers at the Dec. 16 Governing Council meeting https://www.reuters.com/markets/rates-bonds/exclusive-ecb-governors-home-temporary-limited-bond-purchase-boost-sources-2021-12-09 will debate options on how to adapt the bank’s regular asset purchase programme (APP) once a much larger pandemic-fighting scheme ends in March.The survey found relatively steady euro zone growth forecasts, with most citing the spread of new coronavirus variants, not persistent inflation, as the biggest economic threat next year.While the risk of variants is global, the ECB differs in its response from its U.S. and UK counterparts as they are almost certain to raise interest rates from near-zero in 2022 – the Bank of England perhaps as soon as February.The ECB has stipulated a rate hike “shortly after” bond purchases end and so is forecast to keep its key interest rates on hold through to end-2023 at least, with the deposit rate at -0.50% and its refinancing rate at zero – in sharp contrast to recent market expectations, now abandoned, for late 2022. “We think that by the end of 2023, the conditions should be met for a rates lift-off, so given the rigid sequencing between the end of QE and the first rate hike, that might be when the ECB announces the end of APP (Asset Purchase Programme), possibly with a short taper,” Fabio Balboni, senior economist at HSBC, said. The ECB is buying 80 billion euros of bonds per month, under its two programmes: 60 billion under the more recent Pandemic Emergency Purchase Programme (PEPP), which it has said it will end in March, and 20 billion under APP. The Dec. 8-10 Reuters poll found that after April, the central bank is set to carry on buying 40 billion euros of bonds a month through the end of next year, with some forecasting ECB buys through to mid-2023. The median from 21 forecasts showed a 20 billion euros APP top-up for a total of 40 billion euros. But 13 of a slightly smaller sample of 20 respondents to an additional question said if the ECB approves an APP increase, there would be an envelope covering a longer period. The rest said it would be in set monthly volumes.”ECB will commit to net APP purchases until at least the end of 2022, but the Council may decide to not yet commit to the 40 billion euros monthly pace for the entire year,” said Bas van Geffen, senior macro strategist at Rabobank. In line with many other economists, van Geffen said the APP could also run through the following year. About 70%, or 18 of 26, who responded to an additional question said the APP would finish by end-2023, while five said by Q4 2024 and three said Q4 2025. Consensus forecasts for euro zone inflation, meanwhile, rose for a sixth consecutive monthly poll, set to top the European Central Bank’s 2% target through Q3 of next year.”Inflation has been overshooting and the medium-term inflation outlook has become a bit more uncertain with risks skewed to the upside,” said Peter Vanden Houte, chief economist at ING. Inflation, which soared to a 25-year high of 4.9% in November, was predicted to average 4.4% and 3.5% this quarter and next. That compares with 4.1% and 3.1% in last month’s poll. It is set to average 2.5% next year after rising at the same rate this year, versus 2.2% and 2.4% predicted in November. Those are higher than the ECB’s latest projections of 1.7% and 2.2%, respectively.The economy was expected to grow 0.6% this quarter and 0.7% in the next, a slight downgrade from 0.8% for both periods a month ago. It was expected to average 4.2% next year, unchanged from last month’s poll and slow to 2.3% in 2023, up from 2.1%.About 60%, or 18 of 31 respondents, said the spread of new coronavirus variants was the biggest downside risk to the euro zone economy next year. Eleven said persistent inflation, while two others said extreme fiscal tightening, and higher energy prices. (For other stories from the Reuters global long-term economic outlook polls package) (Polling by Milounee Purohit, Sujith Pai and Swathi Nair; Editing by Ross Finley, Mark John and Barbara Lewis) More