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UK PMI Index, OPEC+, ECB Minutes and Riksbank’s Hold

The release of the PMI index yesterday showed private sector output expanded across the UK for the first time in three months


The release of the PMI index yesterday showed private sector output expanded across the UK for the first time in three months. The composite index surpassed expectations of 48.7, having risen to 50.1 as services output appreciated to 50.5 from last month’s figure of 49.5. Nevertheless, with the manufacturing figure coming in at 46.7, the sector saw a reduction in production volumes as the impact of tighter monetary conditions continued to percolate into the market. Moreover, while the overall print gave markets some cautious optimism over the health of UK private sector, the report noted how “total new order intakes decreased for the fifth month running, which suggested that subdued underlying demand conditions persisted”.  The report also cited how discretionary consumer spending eased as households adjust to the rising cost of living while overseas demand decreased for both the UK’s manufacturing and services sector. Regarding inflationary pressures, the report noted that while cost pressures continue to remain softer than that seen over Q3, there was a slight uptick in input price inflation which increased marginally from October’s 33 month low. Wage inflation and higher fuel prices also fed into inflationary pressures leading to the greatest level of output charge inflation in four months.


The OPEC+ meeting, originally scheduled for Sunday, has been postponed four days reportedly because of disagreements over output quotas for some African members of bloc. Bloomberg are reporting that there has been friction with Angola and Nigeria, who have been averse to keeping output in line with lower targets. As Bloomberg writes, “the spat dredges up a disagreement from June, when Angola, Congo and Nigeria were pushed by Saudi Energy Minister Prince Abdulaziz bin Salman to accept reduced output targets for 2024 that reflected their diminished capabilities”. Markets have been hotly anticipating the latest OPEC+ meeting as investors speculate on whether Saudi Arabia will extend their supply-side cut of 1million barrels of oil per day. Some are even suggesting that Saudi Arabia could seek to get other members to cut production, as oil prices come under pressure having fallen over 7.5% over the month. The rescheduled date will now fall on the same date of the start of COP28.

ECB Minutes

Yesterday, the release of the ECB’s minutes indicated that policy makers continue to remain cognisant of the downturn in growth, as monetary conditions remain at their highest level in years. The minutes were from Frankfurt’s last policy meeting on 26 October where policy makers kept rates unchanged, marking the first hold since July 2022 after 10 consecutive rate hikes. The release of the minutes comes as the ECB look to present the message that rates will be higher for longer, amidst inflation continuing to be higher than the central bank’s 2% target rate. Here the minutes stated how “members agreed that the Governing Council should continue to stress its determination to set policy rates, through its future decisions, at sufficiently restrictive levels for as long as necessary to bring inflation back to target in a timely manner”.

Riksbank Hold As Policy Makers Weigh Up Growth Concern

Yesterday the Riksbank unexpectedly held their benchmark policy rate at 4% missing projections of 25bps rate hike. While this marked the first pause in their monetary tightening cycle for well over 18 months, policy makers suggested that further tightening could take place if necessary. Such sentiments were reaffirmed by Governor Erik Thedeen said that “It’s very clear we have not lost the chance to hike again”. Swedish inflation continues to be stubbornly high, and though CPI has retreated from February’s peak of 12%, it remains three times above the central bank’s 2% target rate. Policy makers continue to try to balance a precarious tightrope however given concerns surrounding growth. For example, with the Riksbank forecasting a 0.7% decline in GDP this year, and 0.2% contraction over 2024, policy makers appear hesitant to tighten.  

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