Denmark Retail Sales (ann. var. %)

Defying our panelists’ expectations, the economy dodged a sequential contraction in the final quarter of 2022 and expanded 1.1%, according to a preliminary release. Looking at sectors, industry and culture and leisure contributed to growth. Meanwhile, the increase in employment levels in Q4 likely aided consumer sentiment as it gradually improved through December—although it remained pessimistic. This, coupled with cooling price pressures in November–December, should have aided consumers’ budgets and spending somewhat. That said, the economic setback was likely only delayed; the economy should record a shallow decline at the start of 2023, largely on a base effect. The continued increase of borrowing costs is likely denting investment and keeping business sentiment hostage in pessimistic terrain. More positively, the manufacturing PMI hit a seven-month high in January.