Most major US and European equity indices closed lower, while
APAC markets closed mixed. US and benchmark European government
bonds closed sharply lower. European iTraxx and CDX-NA closed wider
across IG and high yield. Natural gas, copper, silver, and gold
closed higher, while the US dollar and oil were lower on the
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- US nonfarm payroll employment rose 199,000 in December, down
from prior months' gains and well below expectations. Civilian
employment, on the other hand, posted a solid gain (651,000),
outpacing a more modest increase in the civilian labor force
(168,000); the unemployment rate declined 0.3 percentage point to
3.9%. (IHS Markit Economists Ben
Herzon and Michael
- The unemployment rate in December was below most estimates of
the "natural rate" and only 0.4 percentage point above the
pre-pandemic low of 3.5%, indicating that labor markets are, once
again, tight and tightening.
- The current (tight) state of the labor market in large part
reflects a continued depressed labor-force participation rate.
- While it has been moving unevenly higher in recent months, at
61.9%, the participation rate remains well below the February 2020
level of 63.4%. Were today's participation rate equal to that of
February 2020, today's level of employment would imply an
unemployment rate of 6.1%—a labor market with plenty of
- Nevertheless, employers are competing for labor that is in
short supply, and wage gains are firming. In December, average
hourly earnings rose 0.6% and prior months' increases were revised
higher. From March 2021 to December 2021, average hourly earnings
rose at a 6.0% annual rate.
- The current rapid spread of the Omicron variant, moreover, has
the potential to temporarily slow the recovery in labor-force
participation and keep wage rates rising at rapid clip.
- Over the next few months, IHS Markit analysts assume that
payroll gains firm only gradually while wage rates continue rising
rapidly, implying solid growth of private wage-and-salary
- Most major US equity indices closed lower except DJIA flat;
S&P 500 -0.4%, Nasdaq -1.0%, and Russell 2000 -1.2%.
- 10yr US govt bonds closed +4bps/1.77% yield and 30yr bonds
- CDX-NAIG closed +1bp/53bps and CDX-NAHY +6bps/309bps, which is
+3bps and +17bps week-over-week, respectively.
- IHS Markit's AAA Tax-Exempt Municipal Analytics Curve (MAC)
sold-off 5bps across the curve, with the curve 11-13bps worse
- DXY US dollar index closed -0.6%/95.72.
- Gold closed +0.5%/$1,797 per troy oz, silver +1.0%/$22.41 per
troy oz, and copper +1.3%/$4.41 per pound.
- Crude oil closed -0.7%/$78.90 per barrel and natural gas closed
+1.5%/$3.73 per mmbtu.
- Outstanding US nonmortgage consumer credit rose $40.0 billion
to $4.41 trillion in November, with the increase nearly evenly
split between revolving and nonrevolving credit. (IHS Markit
Economist Michael Montgomery)
- The 12-month change in outstanding consumer credit was 5.8%,
showing much faster growth.
- Revolving credit rose $19.8 billion, and nonrevolving increased
by $20.2 billion. Both gains vastly exceed recent increases. There
may, however, be a pandemic quirk to the November spurt as
consumers pulled holiday shopping forward on fears of shortages.
Given that risk, it would be premature to give the November surge
an outsized significance.
- The ratio of nonmortgage consumer credit to disposable personal
income was 24.3%, the same as a year earlier, but erratic stimulus
measures make single-month ratios of little use. Still, ratios
remain below pre-pandemic levels.
- The Omicron variant was only known for a few days in November,
so its significance is mostly likely almost nil, but the November
gain in debt is almost a sea-change from earlier this year and
needs to be validated by future releases.
- The calorie disclosure mandate that went into effect for US
chain restaurants in May 2018 has led to some positive changes, as
it has caused restaurants to start offering more low-calorie menu
items, according to a new study conducted by researchers at the
Harvard T.H. Chan School of Public Health. (IHS Markit Food and
Agricultural Policy's Margarita Raycheva)
- But the study also suggests it may take time before the
disclosure leads to more meaningful overall reductions in calories
and that menu labeling may have to be coupled with additional
interventions to provide restaurants with a greater incentive to
reformulate dishes and make their overall menus healthier.
- Published December 30 in JAMA Network Open, the study looked
for potential changes in calorie content for more than 35,000 menu
items offered at 59 large chain restaurants — including
Chipotle, Burger King, IHOP, Dunkin Donuts and KFC—between 2012
- Researchers found that menu offerings introduced after the
calorie disclosure mandate did have fewer calories than new items
introduced before the mandatory calorie disclosure. Specifically,
the study noted that a menu item introduced after the mandate had a
mean of 113 fewer calories, a reduction of about 25%, compared to
new items that debuted on menus before the start of the calorie
- "The nationwide rollout of these calorie labels appeared to
prompt restaurants to introduce lower-calorie items to their
menus," said lead scientist Anna Grummon, a research fellow in
nutrition at the Harvard T.H. Chan School of Public Health.
- On the flip side, however, researchers found that one year
after the mandate, there was no significant reduction in calories
in the menu items that restaurants were already offering before the
calorie disclosure took effect. In addition, authors of the study
discovered no evidence that the mandate was leading restaurants to
remove higher-calorie items from their menus and there was no
difference in the caloric content of items that were dropped from
menus before and after the mandatory disclosure took effect.
- Free2Move is expanding its monthly Car on Demand subscription
service in select cities across California (United States).
According to a company statement, the Car on Demand service, which
provides access to vehicles on a monthly basis, will now be
available in San Francisco, San Diego, San Jose, and Sacramento.
Free2Move aims to "simplify and guarantee mobility for everyone" by
offering a full range of mobility services for individuals and
professionals. These mobility services include taxi rides, as well
as rentals and car sharing. The company has served more than 2
million customers globally and has a presence in more than 170
countries. It has also formed Free2Move eSolutions, a new
e-mobility joint venture (JV) between Stellantis and Engie EPS.
(IHS Markit Automotive Mobility's Surabhi Rajpal)
- On January 7, the Southwest Power Pool lodged with FERC the
Generator Interconnection Agreements for three big wind projects in
Oklahoma of Invenergy Wind Development LLC. The agreements, filed
individually, cover (IHS Markit PointLogic's Barry Cassell):
- States Edge Wind I LLC (Docket ER22-783) - Agreement is with
transmission owner AEP Oklahoma Transmission Co. Inc. for a project
consisting of two hundred-eighty General Electric 2.5-MW wind
turbine generators for a total nameplate capacity of 700 MW. The
project's Point of Interconnection will be where the 345-kV circuit
from the wind farm is attached to AEP's Riverside 345-kV
Substation. The project's targeted commercial operation date is
December 31, 2025.
- States Edge Wind I LLC (Docket ER22-782) - Deal is also with
AEP Oklahoma Transmission. It covers a project consisting of one
hundred-eighty General Electric 2.5-MW wind turbine generators for
a total nameplate capacity of 450 MW. The Point of Interconnection
will be at AEP's Riverside 345 kV Substation. Commercial operation
is targeted for December 31, 2025.
- States Edge Wind I LLC (Docket ER22-781) - Agreement is with
AEP Oklahoma Transmission for a project that will consist of
three-hundred General Electric 2.5-MW wind turbine generators for a
total nameplate capacity of 750 MW. The Point of Interconnection
will be at AEP's Riverside 345-kV Substation. Commercial operation
is targeted for December 31, 2025.
- After expanding for the past 10 months, Canada's purchasing
managers' spending declined in December mainly because of the
negative impact of the Omicron variant and partly owing to British
Columbia's flood damage that negatively affected transportation
infrastructure. The Ivey Purchasing Managers' Index (PMI) plummeted
16.2 points to 45.0 in December, as purchasing managers pulled back
spending for the first time since January 2021. (IHS Markit
Economist Chul-Woo Hong)
- Although the employment index continued to decrease for four
consecutive months, down 4.5 points to 50.0, indicating no change
in monthly employment, December's Labor Force Survey showed a solid
net job gain of 54,700, led by the public sector.
- The inventories index fell 5.4 points to 49.6, showing a modest
first decline in inventory spending since last December. Reflecting
the intensified supply disruption, the supplier deliveries index
dropped to 27.7, remaining at the second-lowest level following the
massive plunge in the first month of the pandemic.
- After the sharp decline in the previous month, the price index
slightly rebounded, partly because of the low exchange rate,
putting modest upward pressure on inflation.
- All subindexes fell except the price index, which increased 2.6
points to 77.6.
- Given the reimposed regional restrictions, more affecting the
service sector, ongoing supply disruption will likely weigh on
purchasing managers' spending activity in the short term.
- Canada's labor-market results, while positive, were not as
solid as the headline figure may suggest. The net employment gains
were concentrated in a few industries, namely construction (up
27,100), education (up 17,300), and manufacturing (up 10,500). On
an upbeat note, employment was up in each goods-producing industry,
totaling 44,100. However, employment tumbled in 6 of 11 services
industries, with the 10,700 loss in finance, insurance, real
estate, and leasing being the largest. The smaller losses, like the
4,000 decline in healthcare, can be at least partially attributed
to implemented proof-of-vaccination policies that resulted in job
losses. (IHS Markit Economist Arlene
- Net employment gained 54,700 in December, which was much better
than IHS Markit expectations.
- Full-time positions were up sharply, at 122,500, and part-time
work fell 67,700. On net, the gains in the private sector and the
number of self-employed workers were low.
- The jobless rate dipped 0.1 percentage point to 5.9%.
- The labor force participation rate was unchanged at 65.3% for a
third straight month and the total number of hours worked increased
0.3% from the prior month.
- Labor-market conditions are about to take a turn for the worse
with the reintroduction of public health measures thanks to
- Colombia closed 2021 with a five-year-high annual inflation
rate of 5.62% in December, led by the rise in food prices. This,
together with higher inflationary expectations and prospects of a
more restrictive US Federal Reserves, will add pressure on the
Central Bank of Colombia (Banco de la República: Banrep) to keep
raising interest rates this year. (IHS Markit Economist Dariana
- According to the National Administrative Department of
Statistics (Departamento Administrativo Nacional de Estadística:
DANE), Colombia's consumer price index (CPI) rose to 5.62% year on
year (y/y) in December 2021, from 5.26% in November, bringing the
annual average rate of inflation to 3.49% in 2021. December's rate
of price inflation was the highest since 2016 and stronger than IHS
Markit's forecast and the market consensus expectation (5.32% y/y
and 5.33% y/y, respectively). In 2020, inflation ended the year at
- Core inflation, measured by the CPI that excludes food and
energy prices, also continued to show an upward trend by rising to
2.85% in December 2021, the highest rate since December 2019,
following readings of 2.77% y/y in November 2021 and 2.32% y/y in
October 2021. In month-on-month (m/m) terms, the headline CPI rose
by 0.73% m/m in December, up from 0.50% m/m in the previous
- As in November, the breakdown of the monthly data showed that
the largest contribution to inflation in December came from food
and non-alcoholic beverages, followed by restaurants and hotels,
transport, and alcoholic beverages and tobacco. Prices of
recreational and cultural services and miscellaneous goods and
services also showed large increases. Meanwhile, clothing and
shoes, education, and information and communications were the only
three categories offsetting part of the rise in inflation last
- In addition, separate data from DANE showed that producer
prices as measured by the producer price index (PPI) rose from
25.8% y/y in November 2021 to 26.6% y/y in December 2021, driven by
rising costs in mining and agriculture. While the index rose by
just 0.80% from the previous month, it still showed the highest
producer prices on record, and we expect that rising input costs
related to raw material shortages and other ongoing supply chain
issues will continue to put upward pressure on producer prices
during the first half of the year.
- Most major European equity markets closed lower except for UK
+0.5%; Italy -0.1%, France -0.4%, Spain -0.4%, and Germany
- 10yr European govt bonds closed lower; Spain/UK +2bps, France
+3bps, Italy +5bps, and Germany +6bps.
- iTraxx-Europe closed +1bp/51bps and iTraxx-Xover +3bps/253bps,
which is +3bps and +11bps week-over-week, respectively.
- Brent crude closed -0.3%/$81.75 per barrel.
- Over 100 local authorities in the UK are pursuing legal action
against European medium- and heavy commercial vehicle (MHCV)
manufacturers involved in price fixing for losses that they
allegedly incurred, reports The Times. According to the newspaper,
the case includes councils that purchased vehicles, as well as 22
fire and rescue services. The authorities claim that as a
consequence of the truck-makers' actions, costs related to the
purchase and ownership were "materially higher than they would
otherwise have been" for at least the period between January 1997
and January 2011. Lawyers representing the claimants estimate that
the authorities were overcharged almost GBP240 million, and are
seeking to claim a further GBP155 million for estimated additional
charges from other companies not involved in price fixing, due to
the cartel's effects on the wider market. They also estimate that
almost GBP60 million was lost due to inflated prices following the
end of the cartel period due to the "delayed onset of the effects
of full competition", which "would not have been charged but for
the cartel". The list of truck-makers defending the claims include
Daimler, which told The Times, "We thoroughly assess all customer
claims and will vigorously defend ourselves against unjustified
claims". It added, "The European Commission has not made any
findings in its decision with respect to possible damage to
customers. This also illustrates the high hurdles that exist for
plaintiffs. Plaintiffs must demonstrate in detail that the exchange
of information in fact led to a concrete damage. Considerable
internal time and effort will be required to furnish that proof and
customers will ultimately not be in the position to meet that
threshold." A spokesperson for Volvo told The Times that the
company does not comment on legal proceedings, and Iveco, DAF and
MAN did not respond to the newspaper's requests for comment. This
is the latest case to emerge in relation to a ruling by the
European Commission that fined the four truck-makers EUR2.9 billion
for colluding on truck pricing in the European Union (EU) over a
14-year period between 1997 and 2011. This was subsequently
followed by the European Court of Justice ruling that owners can
sue the manufacturers in domestic courts arising from the findings
of the case. It also follows the European Commission publishing its
final settlement decision during 2020. (IHS Markit
AutoIntelligence's Ian Fletcher)
- There was another stronger-than-expected increase in eurozone
HICP inflation in December 2021. According to Eurostat's flash
estimate, it edged up from 4.9% to 5.0%, a new record high and
above the market consensus expectation (of 4.7%, according to
Reuters' survey). (IHS Markit Economist Ken
- That is the highest headline inflation rate since the
eurozone's inception in 1999 by some distance - the prior peak in
2008 was 4.1%. The cumulative increase during 2021 was 5.3
percentage points, a record one-year rise, again by a large
- Energy inflation moderated in December for the first time in
seven months, although at 26.0% year on year (y/y) it still
increased by more than 30 percentage points during 2021. Energy
inflation contributed half (2.5 percentage points) of December's
HICP inflation rate, down marginally from November's record
- Food inflation increased sharply to 3.2%, the highest rate
since June 2020. This was driven mainly by unprocessed food
inflation (up from 1.9% to 4.6%), which can be very volatile in
winter months due to weather effects.
- The eurozone's core HICP inflation rate excluding energy, food,
alcohol, and tobacco prices was stable in December at 2.6%,
slightly above the market consensus expectation of 2.5%, and a
record high. As expected, the two constituent parts of the core
inflation rate diverged in December.
- Non-energy industrial goods (NEIG) inflation jumped from 2.4%
to 2.9%, a record high. The strong upward trend during 2021
reflected various influences, including supply-side bottlenecks,
and has further to go. The pre-pandemic rate of NEIG inflation back
in February 2020 was just 0.5%.
- In contrast, services inflation slipped back from 2.7% to 2.4%
in December, although it remained well above its pre-pandemic rate
of 1.6%. The areas of services inflation most sensitive to the
coronavirus disease 2019 (COVID-19) pandemic, such as restaurants
and hotels, fell markedly in 2020 but rebounded during 2021 as
economies reopened and consumer demand recovered strongly.
- Vietnamese OEM VinFast is looking for a production location in
Germany as it looks to establish a European base for the rollout of
its new range of electric cars and buses, according to a company
statement. The factory will build both electric passenger cars and
buses, although there was no timeframe given for when the new
facility will open. In its statement, VinFast said, "VinFast wants
to offer high-quality e-vehicles and a special customer experience
at affordable prices. We are confident we can find a place in the
European market, especially since the shift to e-vehicles in Europe
is crystal clear." VinFast is an interesting and ambitious company,
although it suffered a setback last month when its CEO, and former
head of Opel, Michael Lohscheller stepped down for personal
reasons. Lohscheller had already created a shortlist of locations
for VinFast to establish a German production location, which
initially had five potentials sites but which have been whittled
down to two, according to an interview Lohscheller gave with
Automobilwoche prior to his departure. (IHS Markit
AutoIntelligence's Tim Urquhart)
- A sharp fall in production of motor vehicles led to a decline
in French industrial output in November, and leading indicators
point to more weakness ahead as the sector deals with material
shortages, supply chain disruption, and higher costs. (IHS Markit
- French industrial production declined by 0.4% month on month
(m/m) in November, according to seasonally adjusted figures
released by the National Institute of Statistics and Economic
Studies (Institut national de la statistique et des études
économiques: INSEE). Production had risen by 0.9% m/m in
- Industrial output fell by 0.5% year on year (y/y) in November.
Quarterly figures show industrial production declining by 0.4%
during the three months to November.
- Output was still 5.0% below its level right before the pandemic
in February 2020.
- The manufacture of transport equipment fell particularly
sharply in November (-4.6% m/m), following a rise of 8.0% m/m in
October (-3.0% on a quarterly basis). Production of transport
equipment was still 27.4% below that in February 2020.
- The breakdown by main industrial grouping shows capital goods
(-3.8% m/m) being the main drag on production. On the other hand,
production of intermediate (+1.2% m/m) and consumer durable and
non-durables goods (+0.9% m/m and +0.6% m/m) rose in November.
- Energy production also increased by 1.2% m/m in November,
following two months of virtually flat production.
- French consumption of goods rose by 0.8% month on month (m/m)
in November 2021, according to seasonally adjusted figures released
by the National Institute of Statistics and Economic Studies
(Institut national de la statistique et des études économiques:
INSEE). (IHS Markit Economist Diego
- Consumption of goods represent around 45% of total consumption.
However, this share has been very volatile since the start of the
pandemic, affected by COVID-19 restrictions.
- Consumption of goods had fallen by 0.6% m/m in October 2021.
Quarterly figures, which remove some of the volatility found in
monthly data, show it declining by 0.2% during the three months to
- The breakdown shows a particularly strong rebound in household
durables (+6.1% m/m), while sales of transport equipment also
increased (+1.8% m/m, following a fall of 3.4% m/m in October
- Energy consumption also rose by 0.5% m/m (+1.0% m/m in October
2021), despite the sharp increase in electricity and gas
- Italy-based Repower Renewables has announced plans to build a
495 MW offshore wind farm around 70 kilometers off the eastern
coast of Calabria, Italy. The project will feature 33 wind
turbines, with an estimated capacity of 15 MW each. The company has
submitted plans to the Ministry of Infrastructure and Transport
Port Authority of Crotone for a 30-year concession to build and
operate the wind farm. The wind turbines will be connected via 66
kV array cables and the electricity generated will be transported
to shore through a 380 kV export cable. Repower is one of 64
developers who noted their expression of interest to build floating
wind farms in Italy. The survey was carried out last year by
Italy's Ministry of Ecological Transition. (IHS Markit Upstream
Costs and Technology's Melvin Leong)
- In an extraordinary session held on 21 December 2021, the Board
of Directors of Banco Nacional de Angola (BNA) approved the
recapitalization and restructuring plan submitted by Banco
Economico (BE). In an announcement on its website, the central bank
noted that it will continue to monitor BE's progress in meeting the
steps outlined in the recapitalization plan and would take
additional action to protect the stability of the financial system
and depositors of the bank, if needed. The bank's major
shareholders are Sonangol, Angola's state-owned oil company, which
owns 70% of BE's shares through various holding companies and
subsidiaries, Geni Novas Tecnologias (19.9%) and Portugal's Novo
Banco (9.7%), according to BE's website. (IHS Markit Banking Risk's
- BE, Angola's sixth-largest bank by assets (7% of assets), was
formed out of the failed subsidiary of Portugal's Banco Espírito
Santo in 2014. Since its relaunch, the bank has struggled with poor
asset quality and low capital buffers.
- In March 2020, the BNA announced that BE would need to raise
capital after its asset quality review revealed shortfalls.
- BE has not released any financial statements since the third
quarter of 2019 and no details a timeline of its recapitalization
plan were released by the BNA or published on BE's website.
- In October 2021, the BNA had publicly threatened to liquidate
BE if its shareholders did not submit a credible recapitalization
plan. At that time, local news sources suggested that the bank
would need AOA1.1 billion (USD2 million) of fresh capital from
shareholders, plus issue convertible 10-year bonds of about AOA50
billion. At that time, it was also suggested that the BNA had
propose converting a loan made by Novo Banco to BE in 2014 into
share capital as well as large depositors' holding accounts worth
over AOA3 billion into shares to prevent Sonangol from having to
inject more capital.
- Major APAC equity indices closed mixed; Hong Kong +1.8%,
Australia +1.3%, South Korea +1.2%, India +0.2%, Japan flat, and
Mainland China -0.2%.
- The People's Bank of China (PBOC) has started to provide
low-cost loans to fund decarbonization activities via a scheme that
financial experts say could play a key role in helping the country
reach its climate goals. (IHS Markit Net-Zero Business Daily's Max
- Under the carbon emissions reduction facility (CERF) launched 8
November, Chinese financial institutions licensed to operate
nationwide can apply for PBOC funds to support their loans to clean
energy, energy conservation, and environmental protection
- Sun Guofeng, head of the Chinese central bank's monetary policy
department, said 30 December that the first batch of funds totaling
CNY 85.5 billion ($13.4 billion) were already distributed to
lenders to back decarbonization projects that can cut CO2 emissions
by 28.8 million metric tons. "The PBOC will continue … to help
China reach the goals of reaching peak CO2 emissions by 2030 and
carbon neutrality by 2060," Sun said during a press conference,
citing the country's national targets.
- The central bank has not indicated an upper limit for the CERF
funds. Based on the amount of domestic green loans, CCB Futures, a
brokerage owned by state-controlled China Construction Bank,
estimates that the PBOC could distribute CNY 1.26 trillion per year
via the facility. Anhui-based Huaan Securities estimates the figure
at CNY 1.8 trillion.
- In a research note published last September, the International
Energy Agency said China—the world's largest GHG
emitter—needs an annual investment of CNY 4 trillion in its
energy sector alone to reach the 2030 climate target.
- Baidu-backed smart electric vehicle (EV) company JiDU Auto said
its next-generation Level 4 autonomous vehicle (AV) will be powered
by NVIDIA DRIVE Orin SoC (system-on-chip). NVIDIA DRIVE Orin has
more than 250 TOPS (trillion operations per second) of computing
performance and can support functions such as automated vehicle
operation and infotainment. The JiDU intelligent driving system is
powered by Baidu's AV computing platform using NVIDIA DRIVE Orin.
According to JiDU, the vehicle will be showcased at the Beijing
Auto Show in April, and mass production and delivery will start in
2023. Robin Li, Baidu co-founder and CEO, said, "The JiDU vehicle
has been designed to operate under the concepts of free movement,
natural communication, and self-improvement". (IHS Markit
Automotive Mobility's Surabhi Rajpal)
- China's Wanhua Chemical Group has ramped up the operating rate
at its new 650,000 mt/yr propylene oxide/styrene monomer (PO/SM)
plant to about 80% of capacity after attaining on-specification
output last month, said a source with knowledge of the matter.
Daily output at the plant, located in Yantai, Shandong province,
has reached around 1,500 mt, said the source, adding that the
unit's operating rate will be further increased gradually to ensure
stable operations. Wanhua attained on-specification styrene output
on Dec. 23, the source said. (IHS Markit Chemical Market Advisory
Service's Trisha Huang)
- The unit is the first among three similar-sized plants slated
for commissioning in China in early 2022.
- Also in late December, Ningbo ZRCC Lyondell Chemical Co.
started feeding raw material into its 600,000 mt/yr PO/SM plant in
Zhejiang province. On-specification output is expected in the
coming week, according to IHS Markit chemicals.
- Lihuayi Lijin Refining & Chemical has also begun feeding
raw material into its 720,000 mt/yr styrene plant and start-up is
slated for mid-January, according to IHS Markit chemicals.
- Ahead of a wave of new supplies, the spot CFR China styrene
price spread against spot FOB Korea benzene shrank by 34.2% on
month to $158/mt in December, the smallest monthly spread in 2021,
OPIS data show.
- For comparison, the styrene/benzene spread averaged $296/mt in
the first six months of 2021, the data show.
- About 5 million mt/yr of new styrene capacities are scheduled
to be onstream in China this year, following the commissioning of
six plants with a combined capacity of 2.46 million mt/yr last
year, according to IHS Markit chemicals.
- Japan's real household expenditures fell by 1.2% month on month
(m/m) in November following two consecutive months of increases,
while the year-on-year (y/y) figure continued to fall (down 1.3%).
The m/m weakness largely reflected a shortfall after a surge in
spending on transportation and communication and a sharp drop in
spending on education. The weakness was partially offset by a solid
rise in spending on clothing and footwear. (IHS Markit Economist Harumi
- Nominal cash earnings held at the year-earlier level, but real
cash earnings fell by 1.6% y/y for the third consecutive month of
decline, according to the monthly labor survey for November.
Contractual cash earnings rose by 0.5% y/y, reflecting increases in
hours worked. However, this was offset partly by a 7.9% y/y drop in
special earnings (mainly seasonal bonuses). A faster increase in
the number of part-timers with softer growth in part-timers'
earnings per hour also weighed on the growth of cash earnings.
- November's household expenditures were weaker than IHS Markit
expected. Although the weakness was due partially to constrained
auto supply and lower communication charges, the figures suggest
that consumers remain cautious about resuming activity despite
easing COVID-19 containment measures. Reportedly, restaurant
reservation rates moved up towards the end of the year and New
Year's Day sales drove solid growth for sales at major department
- Due to higher dairy product finishing stocks in 2021, Japan
expects to see flat to lower butter and SMP imports in 2022.
According to the USDA´s Foreign Agricultural Service (FAS), Japan's
fluid milk production in 2022 will increase about 1% from 2021's
estimated 7.5 million tons on a greater number of new cows. (IHS
Markit Food and Agricultural Commodities' Jana Sutenko)
- Despite both rising feed prices and stagnating prices on milk
for further processing, the experts anticipate that with the
support of compensation programs, the impact on dairy farm
management in 2021 and 2022 will be limited.
- The latest customs data, available until November 2021, reveals
that total imports fell 6% in volume in the first 11 months of the
year, led by a 45% y/y slump in SMP imports to 19,400 tons.
Similarly, butter supplies also plunged, but to a slightly lesser
extent, by 38% y/y to 10,500 tons.
- FAS expects this export trend to continue in 2022. In the end
of 2021, Japan was left with surplus stocks of butter as the milk
production accumulated from closure of schools and foodservice in
2020 was diverted into butter and SMP.
- The situation with producing shelf-stable products from surplus
milk has continued through August 2021. As large butter stocks
remain, FAS projects that Japan's butter imports in 2022 will
remain flat y/y, and the imports will be mostly product imported
through the TRQ operated by ALIC as well as certain niche products
traded outside of the TRQ.
- Ending stocks of SMP have hit their historical high in
late-2021, at around 90,000 tons, and are likely to o higher in
2022, despite MAFF's lowered TRQ for SMP in the past two years. FAS
projects that Japan's SMP imports in 2022 will decrease y/y because
of reduced TRQs for ALIC tenders and large stocks; the imports in
the first eight months in 2021 were only half of 2020.
- Industry sources report strong household consumption has held
demand for dairy products made of SMP, such as yogurts (down 1%
y/y) and ice cream (up 3% y/y), in 2021. However, industry use of
these products has only half-recovered.
- LG Electronics has developed new biometric recognition
technology that enables car owners to turn on the ignition without
using a key, according to a press release by Digi Times Asia. The
technology identifies facial expressions along with finger
movements leveraging the use of multiple in-car cameras. LG's
authentication system, with the help of a first camera, identifies
the user's specific body parts, and through a second camera
automatically resets its viewing angles based on the data points of
the first camera to capture the user's iris and other biometric
features. This allows the user to start up the vehicles as well as
adjust or control the vehicle through facial expressions and hand
gestures. The technology also helps to detect whether a driver is
drowsy or has a sudden illness by monitoring eyelids and facial
movements. The press release adds that LG and its subsidiaries are
working to ensure that more emphasis is placed on development
through various patented technologies, including autonomous driving
devices, automotive in-cabin foldable displays, and
vehicle-to-everything (V2X) communications technologies. (IHS
Markit AutoIntelligence's Jamal Amir)
- Hyundai has signed a memorandum of understanding (MOU) with
Singapore-based real-time 3D content developer and platform
operator Unity to jointly design and build a new metaverse roadmap
and platform for a meta-factory, according to a company press
release. Under the MOU, the two parties aim to build a meta-factory
concept, a digital twin of an actual factory supported by a
metaverse platform. Hyundai will be able to virtually test-run a
factory in order to compute the optimal plant operation, and plant
managers will be able to handle problems without having to
physically visit the plant, thanks to the advent of a meta-factory.
The collaboration will also result in a real-time 3D and virtual
platform that will reach a large number of Hyundai consumers,
providing them with a more comprehensive range of services across
sales, marketing, and customer experience, according to the
automaker. Hyundai intends to implement the meta-factory concept
first at the Hyundai Motor Global Innovation Center in Singapore
(HMGICS), currently under construction. After construction of the
physical center is completed by the end of this year, the automaker
plans to open the virtual factory by 2025. Hyundai and Unity's
collaboration at HMGICS will accelerate intelligent manufacturing
innovation by merging artificial intelligence, 5G, and other
advanced technologies into a next-generation smart factory
platform. (IHS Markit AutoIntelligence's Jamal Amir)
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