Economic Review of the United States and Europe
2023-08-03
■ U.S. economy? Confirms the underlying conditions of the economy through various indicators.
■ European Economy? Continued deterioration of business confidence among enterprises.
The real GDP growth rate from April to June (quick report value, the year-on-year rate in the previous period was 2.4%) accelerated for the first time in three quarters. Growth was driven by robust investment in equipment and consumption of services. On the other hand, residential investment, import, and export decreased, and financial consumption also increased slightly, with uneven strength in terms of demand items.
The increase in the employment cost index (up 1.0% from the previous period) slowed down in the April-June quarter, the lowest increase since the April-June quarter of 2021. Although it still continues to rise at a relatively high level, on a real basis, employment costs have shifted from a slowdown in inflation to an increase. It can also be seen that the pressure on wage requirements in the future is easing.
In July, the consumer confidence index (117.0, up 6.9 points from the previous month) rose for the second consecutive month, reaching the highest level since July 2021. Both the current situation index and the expectation index have risen sharply. Affected by the improvement of the business environment and employment environment, consumer sentiment has improved.
On the 25th and 26th, the US Federal Open Market Committee (FOMC) decided to raise interest rates by 0.25%. Although in the statement, the economic judgment was slightly revised upwards, regarding the future policies and policies, the content on future policies is generally used, including the possibility of additional interest rate hikes, and the policy of judging based on future data is maintained.
In the survey of operators and consumers in the euro area in July, the sentiment index (94.5, down 0.8 points from the previous month) fell for the third consecutive month. Indexes of business conditions fell in major industries other than retail, with a sharp drop in manufacturing in particular. In addition, the sales price expectations index fell outside the services sector, suggesting that inflationary pressures in goods are easing, while inflation in services is entrenched.
In July, the PMI flash report of the euro area, the manufacturing industry (42.7, down 0.7 percentage points from the previous month), and the service industry (51.1, down 0.9 percentage points year-on-year) all declined. Confirming that the pace of contraction in manufacturing activity has accelerated, and the pace of expansion in services sector activity has continued to slow. New orders for both manufacturing and services are deteriorating, and weak demand can be seen as mediocre.
On the 27th, the European Central Bank (ECB) Council decided to raise interest rates by 0.25%. The wording of the statement did not change much, although it acknowledged that the underlying inflation rate showed signs of falling, but still left the possibility of additional interest rate hikes in order to curb the still high level of inflation. With regard to future policies, we have strengthened our neutral attitude and proposed a policy of making judgments based on price-related data.
■ European Economy? Continued deterioration of business confidence among enterprises.
The real GDP growth rate from April to June (quick report value, the year-on-year rate in the previous period was 2.4%) accelerated for the first time in three quarters. Growth was driven by robust investment in equipment and consumption of services. On the other hand, residential investment, import, and export decreased, and financial consumption also increased slightly, with uneven strength in terms of demand items.
The increase in the employment cost index (up 1.0% from the previous period) slowed down in the April-June quarter, the lowest increase since the April-June quarter of 2021. Although it still continues to rise at a relatively high level, on a real basis, employment costs have shifted from a slowdown in inflation to an increase. It can also be seen that the pressure on wage requirements in the future is easing.
In July, the consumer confidence index (117.0, up 6.9 points from the previous month) rose for the second consecutive month, reaching the highest level since July 2021. Both the current situation index and the expectation index have risen sharply. Affected by the improvement of the business environment and employment environment, consumer sentiment has improved.
On the 25th and 26th, the US Federal Open Market Committee (FOMC) decided to raise interest rates by 0.25%. Although in the statement, the economic judgment was slightly revised upwards, regarding the future policies and policies, the content on future policies is generally used, including the possibility of additional interest rate hikes, and the policy of judging based on future data is maintained.
In the survey of operators and consumers in the euro area in July, the sentiment index (94.5, down 0.8 points from the previous month) fell for the third consecutive month. Indexes of business conditions fell in major industries other than retail, with a sharp drop in manufacturing in particular. In addition, the sales price expectations index fell outside the services sector, suggesting that inflationary pressures in goods are easing, while inflation in services is entrenched.
In July, the PMI flash report of the euro area, the manufacturing industry (42.7, down 0.7 percentage points from the previous month), and the service industry (51.1, down 0.9 percentage points year-on-year) all declined. Confirming that the pace of contraction in manufacturing activity has accelerated, and the pace of expansion in services sector activity has continued to slow. New orders for both manufacturing and services are deteriorating, and weak demand can be seen as mediocre.
On the 27th, the European Central Bank (ECB) Council decided to raise interest rates by 0.25%. The wording of the statement did not change much, although it acknowledged that the underlying inflation rate showed signs of falling, but still left the possibility of additional interest rate hikes in order to curb the still high level of inflation. With regard to future policies, we have strengthened our neutral attitude and proposed a policy of making judgments based on price-related data.