Solid consumption signals

Daily update

The UK January labor market data was not especially surprising. Bonus payments were slightly weaker than expected, one of the unemployment measures (the ILO) was a fraction higher, but payrolls were stronger than expected. The ongoing rise in real incomes should offer some support to consumer spending (it is shifting savings rates, rather than incomes, that have been the restraint on spending).
German final January inflation was unchanged (as expected—this is one of the few German numbers almost never to be revised). It is not market moving, but does serve as a reminder that for economies untroubled by tariffs the underlying inflation pressures do seem generally benign—which helps with real incomes.
The US Empire State opinion poll is due. Survey evidence, and evidence based on opinion (in these polarized times) needs to be treated with considerable caution. However, it is unfair to be critical just of these surveys—the response rate to the surveys used to calculate US unemployment is below pandemic-era levels. This raises questions about data precision (and perhaps policy error risks).
As UK and German data reiterates, the general economic narrative is a steady if slightly dull level of growth, with few obvious imbalances to derail that. Financial market volatility cannot be blamed on economics.