经济月报（2023年9月）

September 2023 Global: High uncertainty despite hopes for a soft-landing China Downward pressure on manufacturing and propertysector should ease with latest policy supports.But economic growth remains weak given domestic,external and structural headwinds. EuropeDecelerating economic growth in euro- zone support signs of higher recessionrisks in the second half of this year.Rate hike at September’s meeting maybe the last of this cycle. The rateswould then remain flat until mid-2024. US Japan Despite lower risk of a hard landing,job market boom is over, underlyinginflation is softening, and creditconditions are tightening.This suggests the Fed might end thecurrent rate hike cycle soon. High cost of living and weakdemand in Japan’s major exportmarkets are dragging growth.The BOJ head has signaled thecentral bank might end thenegative interest rate policy nextyear. Post-lockdownrecoveryisrunningoutofsteam;Eurozone’sservicesindustryhasreversedtocontractionterritory;China'sservicesactivityexpandedatitsslowestratein8months US:Despite lower risk of a hard landing, job market boom is over, underlying inflation issoftening, credit conditions are tightening, suggesting the Fed might end rate-hike cycle KrungsriResearch’sview FedChair Powell’s speech at the annual central bank meeting at Jackson Hole has increased theprobabilityof‘higherratesforlonger’.However,givensignsofacoolinglabormarketandsofteningunderlyinginflation,theFedmightchoosetobecautiousandtakemovestoavoidarecession. Toavoidahardlanding,theFedisunlikelytoraisepolicyratefurther,supportedbythefollowing:I.Normalizinglabormarket:JobOpeningsfelltoitslowestsinceApril2021,at8.827minJuly.InAugust,unemploymentrateroseto3.8%,itshighestsinceFebruary2022,andaveragehourlyearningsrosebyonly0.2%MoM,thesmallestrisesinceFebruary2022.Wagegrowthhaseasedandnowoutpacedinflation.TheFed’ssurveyofConsumerExpectationsalsoshowsjoblossexpectationshavesurgedtoitshighestsinceApril2021.II.Headwinds for spending growth:Perception of credit access deteriorated in August, with the share ofhouseholds reporting it is harder to obtain credit than one year ago hitting a new high since the seriesstarted. Also, delinquencies in credit card and auto loans have jumped back to 2019 levels and doubledsince the lows in 2021. Given multi-year high interest rates, elevated carrying costs will soon eat intosavings and spending.III.Downwardpressureonunderlyinginflation:Coreinflationeasedto4.3%YoYinAugustfrom4.7%inJuly.Excludingshelter,coreinflationwasonly2.2%YoYinAugustandthe3-monthannualizedratejust0.8%.Weakergrowthandcoolinglabormarketwouldputdownwardpressureoninflation.Giventhenormalizinglabormarket,slowingeconomicgrowth,coolingdemand-pullpricepressures,andintentiontopreventahard-landing,theFedmighthaltthecurrentrate-hikecycle.Theymightkeeppolicyrateshighforanextendedperiod,oruntilthereareclearersignsthatinflationwouldreturntoits2%targetinasustainablemanner. Eurozone:Decelerating economic growth in Eurozone adds to signs of rising recessionrisks in the second half of this year KrungsriResearch’sview ThecombinationofhighinterestratesandinflationcontinuedtodragtheeurozoneeconomytowardsacontractioninQ3.Thatisvisibleinthelatestdata:(i)thesharpestcontractioninCompositePMIinAugustsinceNovember2020;(ii)retailsalesfallingfor10thconsecutivemonthinJuly;(iii)EconomicSentimentIndex(ZEW)fallingforthe5thconsecutivemonthinSeptember;(iv)August2023registeredfirstdropinConsumerConfidenceIndexsinceSeptember2022.ThesecondreadingforQ2GDPgrowthhadbeenreviseddownto0.1%QoQfrom0.3%.Withmoredatasuggestingcontractionsineconomicactivities,thereishigherriskofEurozonefallingintoarecessionin2H23.Theeffectsoftightermonetarypolicieswillcontinuetodepresscreditandmoneygrowth,whichreinforce thepictureofaneconomicslowdowninthecomingquarter.Themostvisiblesignsare:(i)shiftingoutofmoneydeposits;(ii)quantitativetightening;and(iii)weakdemandforandprovisionofcredit,moneysupply-whichisconsideredameasureofeconomicactivity-continuedtoshrinkinJulywithnarrowmoney(M1)contractingbyarecord9.2%YoYwhilebroadmoney(M3)fellby0.4%YoY.Thelatestdatasuggestseconomicgrowthwillremainveryweakandcontinuetodragconsumptionandinvestmentexpenditureinthecomingquarter.Furtherslowdown in economicactivitiescouldweakenemployment anddraginflation.Historicaldatasuggestthelabormarketisatrailingindicatorofeconomicactivity.Onthisnote,weexpectadownturninbothemploymentandwagegrowthsoonfollowingweakeroutputandmoneysupplygrowth.ThissuggestsinflationwouldcontinuetofallandtheECBwouldnotneedtoraiseinterestratesfurther.TheratehikeatSeptember’smeetingmaybethelastofthiscycle.Totacklestubbornlyhighinflation,theECBhasraiseditskeypolicyratetoarecordhighof4.00%andsignaledthatthecurrentcycleofratehikeswasnearitsendasrateshavealreadyreachedthelevelthatwillmakeasubstantialcontributiontothetimelyreturnofinflationtothetarget.So,wemaintainedourviewsthattheECBmayendthecurrentrate-hikecycleandthenkeeptheratesunchangeduntilmid-2024. Japan:Growthisdraggedbyhighercos