American/European Economics
2023-05-09
■The demand and supply of labor in the US economy are still in a tense state.
■The inflation tone of the European economy remains strong, and the European Central Bank has hinted that it will continue to raise interest rates
The ISM Economic Prosperity Index in April showed that both the manufacturing industry (47.1, an increase of 0.8 percentage points compared to the previous month) and the non-manufacturing industry (51.9, an increase of 0.7 percentage points compared to the previous month) showed a two-month increase. However, the manufacturing industry has been in a contraction range of activity below 50 for six consecutive months. Specifically, new orders and production indicators are all below 50, while customer inventory and expenditure prices are above 50. Especially, customer inventory is at a high level since September 2016, indicating that inventory is accumulating with sluggish demand. Meanwhile, although the rebound in the non-manufacturing index, which has significantly decreased compared to last month, is limited, the overall trend is still a downward trend. Among the main indices, although the new order index has risen for two consecutive months, business activity and employment situation continue to decline.
According to employment statistics in April, the growth momentum of non-agricultural sector employment (an increase of 253000 people month-on-month) accelerated for the first time in two months. Last month's data was significantly revised down, with an increase of less than 200000 for the first time since 2021, indicating that the growth rate is slowing down. However, the unemployment rate (3.4%, a year-on-year decrease of 0.1%) has been declining for two consecutive months, and the average hourly wage (a year-on-year increase of 4.4%, a month-on-month increase of 0.5%) is accelerating on a month-on-month basis, indicating that labor supply and demand are still very tight.
At the European Central Bank (ECB) Council meeting held on the 4th, it was decided to raise the main policy interest rate by 0.25% and slow down the rate hike. In addition, it has been decided to stop the repayment and reinvestment of the Asset Purchase Program (APP) from July and accelerate the reduction of asset holdings. Although the statement did not provide specific guidance on future interest rate hikes, at the ECB President Lagarde's press conference she denied the possibility that the next rate hike would be put on hold and stated that she would continue to raise interest rates to control inflation.
Although the preliminary value of the consumer price index (HICP) in the euro area in April (up 7.0% year-on-year) rose slightly, it accelerated in the past six months. The rise in energy prices and the acceleration of service price increases have both had an impact on this. Although the rate of increase in commodity prices is slowing down, the rate of increase in service prices is still accelerating, so the inflation trend remains strong.
Eurozone retail sales in March (down 1.2% month-on-month) have been declining for two consecutive months, falling to the lowest level since April 2021. Except for automotive fuel, all major projects experienced a significant decrease of over 1% last month, indicating that commodity demand is declining.
■The inflation tone of the European economy remains strong, and the European Central Bank has hinted that it will continue to raise interest rates
The ISM Economic Prosperity Index in April showed that both the manufacturing industry (47.1, an increase of 0.8 percentage points compared to the previous month) and the non-manufacturing industry (51.9, an increase of 0.7 percentage points compared to the previous month) showed a two-month increase. However, the manufacturing industry has been in a contraction range of activity below 50 for six consecutive months. Specifically, new orders and production indicators are all below 50, while customer inventory and expenditure prices are above 50. Especially, customer inventory is at a high level since September 2016, indicating that inventory is accumulating with sluggish demand. Meanwhile, although the rebound in the non-manufacturing index, which has significantly decreased compared to last month, is limited, the overall trend is still a downward trend. Among the main indices, although the new order index has risen for two consecutive months, business activity and employment situation continue to decline.
According to employment statistics in April, the growth momentum of non-agricultural sector employment (an increase of 253000 people month-on-month) accelerated for the first time in two months. Last month's data was significantly revised down, with an increase of less than 200000 for the first time since 2021, indicating that the growth rate is slowing down. However, the unemployment rate (3.4%, a year-on-year decrease of 0.1%) has been declining for two consecutive months, and the average hourly wage (a year-on-year increase of 4.4%, a month-on-month increase of 0.5%) is accelerating on a month-on-month basis, indicating that labor supply and demand are still very tight.
At the European Central Bank (ECB) Council meeting held on the 4th, it was decided to raise the main policy interest rate by 0.25% and slow down the rate hike. In addition, it has been decided to stop the repayment and reinvestment of the Asset Purchase Program (APP) from July and accelerate the reduction of asset holdings. Although the statement did not provide specific guidance on future interest rate hikes, at the ECB President Lagarde's press conference she denied the possibility that the next rate hike would be put on hold and stated that she would continue to raise interest rates to control inflation.
Although the preliminary value of the consumer price index (HICP) in the euro area in April (up 7.0% year-on-year) rose slightly, it accelerated in the past six months. The rise in energy prices and the acceleration of service price increases have both had an impact on this. Although the rate of increase in commodity prices is slowing down, the rate of increase in service prices is still accelerating, so the inflation trend remains strong.
Eurozone retail sales in March (down 1.2% month-on-month) have been declining for two consecutive months, falling to the lowest level since April 2021. Except for automotive fuel, all major projects experienced a significant decrease of over 1% last month, indicating that commodity demand is declining.