U.S. Shutdown Robs Wednesday’s Productivity Report of Main Gauge
The Labor Department will publish new data on U.S. productivity Wednesday, though the report will lack the main measure because of the government shutdown. The fourth-quarter productivity and costs release due at 8:30 a.m. in Washington will include manufacturing productivity for the period, though not the headline gauge of nonfarm business productivity or figures on unit labor costs, according to a fact sheet from the department’s Bureau of Labor Statistics. While Labor remained open during the shutdown, some of its reports incorporate data from other agencies. That means the nonfarm productivity measure most economists watch as the main gauge can’t be updated because it relies on gross domestic product data from the Commerce Department, which was closed and hasn’t released the fourth-quarter report on GDP. The Commerce Department’s Bureau of Economic Analysis has yet to announce a new date for the GDP report. The productivity report’s manufacturing output figures are derived from other data from Commerce, Labor and the Federal Reserve. The last productivity report, released Dec. 6 for third-quarter revisions, showed efficiency gains posted the best back-to-back quarters since 2015. The nonfarm gauge increased at a 2.3 percent annualized rate in the July-September period, and Wednesday’s report will include any additional revisions to that number. Unit labor costs — a key inflation input that the Federal Reserve monitors closely — rose 0.9 percent.
ECB Is Said to Need More Convincing on Long-Term Loans for Banks
European Central Bank officials see no urgent need to offer new long-term loans to banks and aren’t certain to do so at their next policy meeting in March, according to people familiar with the matter. Officials aren’t yet convinced about the necessity for more liquidity and are nervous that an offering could fuel perceptions that they’re helping out particular lenders, said the people, asking not to be identified because the issue is confidential. An ECB spokesman declined to comment. Banks including Deutsche Bank AG, among the biggest borrowers under the program, are waiting to find out if the ECB will renew some 720 billion euros ($820 billion) of loans provided in the depths of the sovereign debt crisis to shore up lending. ECB President Mario Draghi said in January that officials would need to see a “good case for monetary policy” before deciding to supply fresh funding. A darkened growth outlook and no prospects for new large-scale asset purchases could provide some grounds for that. Banks have also alerted the ECB that an expiration of the existing so-called TLTROs would probably make refinancing more expensive, with the costs likely to be passed on to companies. “We have seen Draghi being very much aware of any tightening of financial conditions and market sell-off in the past years. Perhaps in his view that could be enough of a monetary-policy case,” said Piet Christiansen, a senior analyst at Danske Bank.
Interest Rate Cuts Back in Play for Asian Emerging Economies
Central banks in Asian emerging markets are turning cautious and some appear set to dump their hawkish policy stances. Inflation is subdued, currencies have rebounded and the U.S. Federal Reserve has shifted to a pause in its tightening cycle. That gives Asian developing nations from India to Indonesia a chance to put a brake on interest-rate hikes and possibly start signaling cuts. Of the three Asian policy decisions this week, Thailand held rates on Wednesday and between the Philippines and India, the latter is the closest to a possible rate reduction. Of the 38 economists surveyed by Bloomberg as of Wednesday afternoon, eight see the Reserve Bank of India lowering the benchmark rate on Thursday. The Philippines is expected to dial back much of the hawkish commentary of last year and follow Thailand’s example of standing pat. In Indonesia, where data on Wednesday showed a resilient economy, the central bank has said the benchmark rate is close to its peak. Bank Indonesia’s next policy decision is due on Feb. 21. “With the Fed changing track and growing signs of slowing demand side pressures, drivers of monetary policy in Asia have definitely shifted,” said Priyanka Kishore, head of India and Southeast Asia economics at Oxford Economics Ltd. in Singapore. “A cut is now increasingly likely in India in the first half and an extended pause elsewhere in the region like in Thailand and the Philippines.”
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