After what has been a solid month for equities and bond investors, month end flows have probably play their part in the price action overnight, US equities have lost momentum, UST have led a rise in core global bond yields and the USD is stronger. US and European inflation releases favoured the notion the Fed and ECB are done with their respective tightening cycles.
NAB Economics Data Insights – week ending 28 May 2022
Our latest weekly consumer tracking data to 28 May was broadly solid, although there are signs of softening from highs earlier this year.
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NAB Chief Economist, Alan Oster commented
- Our latest weekly consumer tracking data to 28 May was broadly solid, although there are signs of softening from highs earlier this year. While revisions continue to obscure the short-term picture by pushing up prior weeks’ data, it is clear that consumption has dropped somewhat since late April, albeit from very elevated levels.
- Mixed performance between industries continues, although domestic demand-driven sectors, combined with strong performance in mining exports, continues to dominate. That said, with inflationary pressures building and rates rising, consumers are likely to be more cautious in coming months. We already see some of this caution in retail, where fuel retailing is up around 25% on a year-on-year basis. While part of this is people driving more post-covid restrictions, inflationary pressures are clearly having an impact.
- Overall, our seasonally adjusted consumption series stood at 134.3 for the week ending 28 May 2022, using a 2019 base. This was a decline from the week prior (139.5) but is slightly above the same time in 2021 (131.3). Retail stood at 129.0, lower than the week prior (133.0), but still just above levels 52 weeks prior. Hospitality dropped steeply (but after a large data revision the week prior), down to 120.2, compared to 129.1 the previous week.
- Our total inward credits data continues to show business inflows at or above pre-pandemic conditions, although the very strong performance earlier this year may have eased somewhat. Mining has been particularly strong, although has dropped from highs earlier this year. Hospitality remains very strong in our credits data, although it will be interesting to see to what extent recent consumer pull-back reduces inflows in coming weeks.
For further details please see NAB Data Insights (week ending 28 May 2022)