- Spending declines when adjusted for price gain.
- Real disposable income slips.
- Core PCE price index gain eases last month.
by:Tom Moeller
|in:Economy in Brief
- 35.4 in May vs. 37.9 in April.
- All the five subindexes remain below 50.
- New Orders (28.7, lowest since May ’20), Employment (37.2, lowest since June ’20), Production (43.6, contracting for the fifth straight month), Order Backlogs (26.3, a four-year low), and Supplier Deliveries (48.1 vs. 47.3).
- Prices paid index dips 0.9 pt. to 68.4, remaining at an elevated level.
Inflation measured by the European Monetary Union’s HICP rose by 0.1% in May, a seemingly small amount, particularly after increases of 0.2% in March and in April. However, the year-over-year rate at 2.6% is higher than it was in April at 2.4%; the year-over-year inflation rate has actually risen even with that small increase in May! Disinflation progression, however, continues to be in train from 12-months to six-months to three-months, as 12-month inflation rises at a 2.6% annual rate, then barely steps up to 2.7% annualized over six months, before dropping back to 2% over three months. Over three months, the inflation rate is back to the ECB’s target. However, over 12 months, the 2.6% rate continues that string of excessive inflation numbers (now up to 35-months-nearly three continuous years) that the European Central Bank has been over target. With inflation backtracking on the month, this is the highest year-over-year inflation rate since January of this year.
Countries mostly show ongoing progress Results for the large economies in the monetary union continue to show inflation progress for the most part. There's persistent deceleration in France where the 12-month rate at 2.6% falls to 1.5% over three months. In Spain, there's a 3.8% 12-month inflation rate that deflates to 0.7% over three months. In Germany, the 2.8% inflation rate over 12 months moves up to 2.9% over six months and then hovers at 2.8% again over three months. Italy has the lowest year-over-year inflation rate of the bunch, but it shows acceleration with inflation of 0.8% over 12 months rising to a 2.2% annual rate over six months and then stepping up to a 2.3% annual rate over three months.
Core/ex-energy inflation still largely behaves... Italy's core inflation rate moves down on a consistent basis from 2.2% over 12 months to a 1.9% pace over six months to 1.7% annual rate over three months. In contrast, the German rate excluding energy is 2.7% over 12 months, down to 2.6% over six months and back up to 2.8% over three months, stuck in a very narrow range and still substantially above the target sought by the European Central Bank.
Global| May 31 2024Charts of the Week: Oil Consuming
Expectations about when exactly central banks will begin an easing cycle have remained a dominant driver of financial market trends in recent weeks. But in the background to this, heightened enthusiasm for the rollout of Artificial Intelligence infrastructure, reinforced by stellar corporate earnings reports, have additionally contributed to an upbeat mood. In our charts this week we review the messages from the US and European consumer confidence reports that have been released over the past few days (chart 1). Key messages from those reports concern the big role that energy price fluctuations have played for confidence in recent months (chart 2). European consumers also now seem much happier, a message that chimes with the message from this week’s broad money supply data for the euro area as well (chart 3). Labour market activity, nevertheless, has continued to slow in many of the world’s major economies according to high frequency data, a factor that could impinge on the outlook for consumer spending going forward (chart 4). Taking a step back from cyclical matters, we look next at the deterioration in the UK’s net direct investment position in light of the heavy focus on the economy’s predicament during the current general election campaign (chart 5). Finally, and against current global concerns about China’s industrial policies, we look at some sector-specific export trends in China and the recent pace of deflation in its export prices (chart 6).
by:Andrew Cates
|in:Economy in Brief
- Growth remains slowest since mid-2022.
- Inventories & foreign trade subtract slightly more from growth.
- Moderate rise in domestic final demand gain is lessened.
- Acceleration in price index growth is little changed.
by:Tom Moeller
|in:Economy in Brief
USA| May 30 2024U.S. Pending Home Sales Decline Sharply in April
- Decline brings sales to four-year low.
- Weakness spreads throughout the country.
by:Tom Moeller
|in:Economy in Brief
USA| May 30 2024U.S. Goods Trade Deficit Widens to $99.41 Billion in April
- Largest goods trade deficit since May ’22 and larger than expected.
- Exports rebound 0.5% in April, the fourth m/m gain in five months.
- Imports rise 3.1% vs. a 1.7% March drop.
- Very tight range in initial jobless claims has held since last August.
- Continued weeks claims also very steady, between 1.728 million and 1.829 million, with flat trend.
- All the more, the insured unemployment rate is unchanged since March 2023.
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