US NFP grew 253k, unemployment rate down to 3.4%, avg hour earnings up 0.5% mom

    US non-farm payroll employment grew 253k in April, well above expectation of 181k. However, prior month’s growth figure was revised sharply down from 236k to 165k. That compared to the average monthly growth of 290k over the prior 6 months.

    Unemployment rate dropped from 3.5% to 3.4%, below expectation of staying unchanged at 3.5%. Overall, unemployment rate has ranged from 3.4% to 3.7% since March 2022. Labor force participation rate was unchanged at 62.6%. Employment-population ratio was also unchanged at 60.4%.

    Average hourly earnings grew strongly by 0.5% mom, above expectation of 0.3% mom. Over the past 12 months, average hourly earnings have increased by 4.4%.

    Full US non-farm payroll release here.

    U of Michigan consumer sentiment rose to 100.8, second highest since 2004

      U of Michigan consumer sentiment rose to 100.8 in September, up from 96.2 and beat expectation of 96.9. That’s the second highest level since 2004.

      Surveys of Consumers chief economist, Richard Curtin: Consumer sentiment posted a robust rise in early September, reaching 100.8, the second highest level since 2004-only behind the March 2018 reading of 101.4. Importantly, the gains were widespread across all major socioeconomic subgroups. The Expectations Index reached its highest level since July 2004, largely due to more favorable prospects for jobs and income. Despite a lessening of expected gains in nominal incomes in September, inflation expectations also declined, acting to offset concerns about declining living standards. Consumers anticipated continued growth in the economy that would produce more jobs and an even lower unemployment rate during the year ahead. While consumers were somewhat more likely to anticipate that the economic expansion would continue uninterrupted over the next five years, nearly as many expected another downturn sometime in the next five years. The largest problem cited on the economic horizon involved the anticipated negative impact from tariffs. Concerns about the negative impact of tariffs on the domestic economy were spontaneously mentioned by nearly one-third of all consumers in the past three months, up from one-in-five in the prior four months.

      Full release here.

      EU to pay EUR 6000 per migrant taken in for volunteering member state

        As follow up to the agreement at June EU summit regarding control of immigration, the European Commission released the proposal of a plan on expanding the disembarkation and controlled center concepts. The primary aim of the controlled centers is to “improve the process of distinguishing between individuals in need of international protection, and irregular migrants with no right to remain in the EU, while speeding up returns.”

        And under the proposal, host member states will receive full support from EU and EU agencies, including full operational support; rapid, secure and effective processing that prevents secondary movements. In additiona, volunteering member states will recent full financial support on instrature and operation. Also, there will be EUR 6000 per person for the member states accepting transfers of those disembarked.

        The European Commission will push for a pilot phase with flexible approach to start as soon as possible. The proposal will be discussed tomorrow on July 25.

        Commissioner Avramopoulos said: “Now more than ever we need common, European solutions on migration. We are ready to support Member States and third countries in better cooperating on disembarkation of those rescued at sea. But for this to work immediately on the ground, we need to be united – not just now, but also in the long run. We need to work towards sustainable solutions.”

        Full release here.

        IMF: Recent Yen depreciation reflect fundamentals

          IMF Japan mission chief Ranil Salgado said Yen’s recent movements “reflect fundamentals”, adding, “we see both positive and negative effects in yen depreciation.”

          He noted that risks to inflation in Japan are on the upside. But, “inflation in the medium-term will remain well below the BOJ’s target once the cost-push factors go away,” he said.

          “We consider it appropriate for the BOJ to maintain monetary easing until inflation is achieved in a stable and durable manner.”

          Fed Barkin: I’m comfortable with the trajectory we’re on now

            Richmond Fed President Thomas Barkin expressed his comfort with Fed’s current approach to interest rate hikes, stating, “I’m comfortable with the trajectory we’re on now, meeting by meeting, whether you need a 25 basis point hike or not.” He acknowledged the challenges of finding the right balance, but emphasized that even if the decision isn’t perfect, it won’t be too far off.

            Barkin also addressed the uncertainties surrounding the ongoing banking situation and its potential impact on consumer confidence, business investment, and the availability of credit. “There is a lot of uncertainty about what if anything this bank situation does to consumer confidence, business confidence, business investment, consumer spending, availability of credit,” he said, adding that it’s difficult to predict the future effects on demand and inflation.

            Despite the uncertainties, Barkin highlighted the wide range of possible outcomes and Fed’s ability to respond accordingly. “If inflation persists, we can react by raising rates further,” he said. “If I am wrong about the pricing dynamics at play, or about credit conditions, then we can respond appropriately.”

            ECB’s Wunsch awaits core inflation and wage growth to come down

              In an interview with Financial Times, ECB Governing Council member Pierre Wunsch mentioned that the central bank is waiting for both wage growth and core inflation to decrease in conjunction with headline inflation before considering a pause.

              Wunsch stated, “I would not be surprised if we had to go to 4 percent at some point.” He emphasized that ECB aims for a soft landing, and “nobody is going to err on the side of destroying the economy for the sake of destroying the economy.”

              “But I have absolutely no indication that what we are doing (on interest rates) is too much,” he added.

              Regarding rate hikes, Wunsch clarified, “I’m not a fetishist. I’m not going to hike rates even in a recession just because we have 2.3 percent or 2.1 percent inflation in the two-year forecast. But I’m not seeing inflation numbers going in the right direction yet.”

              He also pointed out that if wage agreements persist around a 5 percent growth for an extended period, inflation may not return to 2 percent on a structural basis.

              SPD members vote on German grand coalidtion: 66% for, 34% against

                Angela Merkel secured her fourth term as Chancellor of Germany. Members of the Social Democrats voted for the coalition deal with Merkels’ CDU/CSU. Months of political uncertainty has now ended. The SPD’s vote results were overwhelming, with 66% supporting, and only 34% rejecting.

                ECB de Guindos: Underlying inflation is very, very important

                  ECB Vice President Luis de Guindos said that headline inflation could fall from 8.5% to 6% by mid-2023. However, core inflation could be more stable.

                  “In March we’ll have some projections, we’ll have more data on the evolution of underlying inflation,” Guindos said at CUNEF University. “Underlying inflation is very, very important.”

                  De Guindos also emphasized that inflation will have to clearly converge towards 2% target before the central bank could pause the tightening cycle.

                  BoJ Kuroda laid out options for additional easing if necessary

                    In the post meeting press conference, BoJ Governor Haruhiko Kuroda warned of downside risks to the economy “particularly via overseas economic developments”. He added, “if trade frictions persist, that could have a broad impact on Japanese and overseas economies.” Nevertheless, he also pointed to tankan survey and BoJ’s internal hearings, and noted “trade frictions on Japan’s economy is limited for now”. There is so far no change in the view that the economy is “expanding moderately”. Also, ” momentum for achieving our price target is sustained.”

                    Kuroda also sounded open to more easing and noted “If we think doing so would be necessary to sustain the momentum for achieving our price target, we will ease monetary policy further as appropriate.” The options for additional easing include cutting the short-term interest rate target, lowering the long-term yield target, ramping up asset buying and accelerating the pace of increase in base money.

                    Former UK PM Major: Revoke Brexit notice now, the clock must be stopped

                      Former UK Prime Minister John Major urged the current government to revoke Brexit notice to the EU now. He said, “We need to revoke article 50 with immediate effect. The clock, for the moment, must be stopped.”

                      He added, “It’s clear we now need the most precious commodity of all: time. Time for serious and profound reflection by both parliament and people. There will be a way through the present morass, there always is.”

                      Also, he said Brexit will weaken UK’s position in the world. He argued that “We are a more valued ally for America because of our influence in Europe and we are more valued by Europe because of our close relationship with America.” And, “Britain, shorn of both these long-standing allies, will be seen by the world as a mid-sized, middle-ranking power that is no longer super-powered by her alliances.”

                      Australia house price dropped -2.4% qoq, -5.1% yoy in Q4

                        Australia house price index dropped -2.4% qoq in Q4, deepened from Q3’s -1.5% qoq and missed expectation of -2.0% qoq. Sydney led the way by dropped -3.7% qoq, followed by Melbourne at -2.4%. Hobart (up 0.7%) and Adelaide (up 0.1%) bucked the trend.

                        Through the year growth in residential property prices fell -5.1% yoy in the December quarter 2018. Falls were recorded in Sydney (-7.8 per cent), Melbourne (-6.4% yoy), Darwin (-3.5% yoy), Perth (-2.5% yoy) and Brisbane (-0.3% yoy).

                        Chief Economist for the ABS, Bruce Hockman said: “While property prices are falling in most capital cities, a tightening in credit supply and reduced demand from investors and owner occupiers have had a more pronounced effect on the larger property markets of Sydney and Melbourne.”

                        Full release here.

                        US PPI up 0.4% mom, 8.5% yoy in Sep

                          US PPI for final demand rose 0.4% mom in September, above expectation of 0.2% mom. Two-thirds can be traced to a 0.4% mom prices for services. The index for goods rose 0.4%. Prices less food, energy, and trade services rose 0.4% mom.

                          For the 12 months ended in the period, PPI slowed from 8.7% yoy to 8.5% yoy. PPI ex food, energy and trade was unchanged at 5.6% yoy.

                          Full release here.

                          UK Truss: We very clearly wants a Canada style deal with EU

                            UK Trade Secretary Liz Truss told LBC that the UK was “very clear” about the deal they want with the EU. That is a “Canada style deal where we control our own rules and regulations, we are not subject to the European court and we get a good deal on fisheries.”

                            “There’s a deal there to be done and I think it makes sense for the EU and the UK to sign that deal. But what I’m doing as trade secretary is making sure we’ve got options,” she added. “So we are working on a deal with the United States, we’re working on a deal with the trans-pacific partnership, because what I want is for British exporters to have lots of markets where they can send our fantastic products.”

                            Fed’s Williams labels three rate cuts this year a reasonable starting point

                              In an event overnight, New York Fed President John Williams provided said the economy remains robust, with expectations for continued positive growth and a gradual decrease in inflation. His asserted that three rate cuts within the year could serve as a “reasonable starting point”.

                              Williams highlighted the significant decline in inflation over the past year and a half, emphasizing the “broad-based” reductions across various components of inflation measurements. Despite the positive trend, Williams candidly acknowledged “we still have a ways to go on the journey to sustained 2% inflation.”

                              Eurozone economic sentiment rose to 110.3, back above pre-pandemic levels

                                Eurozone Economic Sentiment Indicator rose strongly by 9.4 to 110.3 in April, above expectation of 103.0. It also scored markedly above its long term average and pre-pandemic level for the first time since the coronavirus outbreak in Europe. Employment Expectations Indicator also jumped 9.3 pts to 107.1), lifting it above long-term average and pre-pandemic level too.

                                Looking at some details, Eurozone industrial confidence rose from 1.1 to 9.4. Services confidence rose from -9.4 to 2.8. Consumer confidence rose from -12.1 to -9.0. Retail trade confidence rose from -11.0 to -1.5. Construction confidence rose from -5.0 to 0.8.

                                EU ESI rose 9.8 pts to 109.7. The ESI rose markedly in all of the six largest EU economies, most so in Poland (+11.3), followed by the Netherlands (+10.7), Spain (+9.1), France (+8.5), Germany (+5.7) and Italy (+5.3). Thanks to the latest increases, sentiment in all six countries is above its long-term average of 100.

                                Full release here.

                                US PMIs: Strong Q2 but exports back in decline

                                  US PMI manufacturing dropped to 54.6 in June, down from 56.4, below expectation of 56.2. PMI services dropped to 56.5, down from 56.8, but beat expectation of 54.9. PMI composite dropped to 56.0, down from 56.6, hit a two-month low.

                                  Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

                                  “The flash PMI surveys add to evidence that the US economy is enjoying a strong second quarter. Despite growth cooling slightly in June, the latest numbers round off the best quarter for three years, and suggest economic growth has lifted markedly higher than the 2.3% rate of expansion seen in the first quarter to well over 3%.

                                  “The upturn also continues to create new jobs in encouragingly high numbers. The employment gauges from the June surveys are running at levels indicative of non-farm payrolls rising by 190,000, with hiring remaining solid in both the services and manufacturing sectors.

                                  “Price pressures remain elevated, however, widely blamed on a mix of rising fuel prices and tariff-related price hikes, as well as supplier’s gaining pricing power as demand outstrips supply for many inputs.

                                  “Risks are tilted to the downside for coming months. Business expectations about the year ahead have dropped to a five month low, led by the weakest degree of optimism for nearly one and a half years in manufacturing. Exports are back in decline, showing the worst performance for over two years, causing factory order book growth to slump sharply lower compared to earlier in the year.

                                  “For the first time this year, factory output is growing faster than order books, suggesting production may be adjusted down in coming months. Inflows of new business into the service sector have meanwhile cooled to the weakest since January. Finally, although employment is still rising strongly, even here there are signs of weakness, with the latest rise in payrolls being the lowest for a year.”

                                  Full release here.

                                  USTR Lighthizer: A breakthrough in NAFTA talks in the next several days

                                    US Trade Representative Robert Lighthizer said yesterday that he’s “hopeful” that there will be a “breakthrough” in NAFTA talks with Mexico in the “next several days”. But he didn’t offer any details. It’s reported that the two sides have largely agreed on the new rules regarding auto trade. And Lighthizer appeared to be willing to ease on the request of sunset clause in exchange for some concessions from Mexico.

                                    On the other hand, Mexican Economy Minister Ildefonso Guajardo urged that “everybody has got to show some flexibility. And he added that “we have everything on the table, there are no preconditions and we’ll see at the end how the whole thing falls into place.” Also, Guajardo said the sunset clause will be among the “very last times” to be dealt with.

                                    While there appears to be some progresses, it should be noted that Canada is not involved in the bilateral talks between the US and Mexico. And is unsure how Canada would be reengaged.

                                    Japan’s industrial production rose 2.0% mom in Jun, moderately picking up

                                      Japan’s Ministry of Economy, Trade and Industry reported 2.0% mom increase in industrial production in June, below expected 2.4%. This places the seasonally adjusted index of production at factories and mines at 105.3, with 2020 as the base of 100.

                                      Motor vehicles led industrial production growth, surging 6.1% thanks to robust demand in both domestic and overseas markets. Out of 15 industrial sectors covered , 10 sectors saw increased output, while production in five dropped.

                                      Despite the production growth coming in lower than expected, the Ministry maintained its basic assessment, noting that industrial production was “showing signs of moderately picking up.”

                                      Looking ahead, the Ministry’s forecast based on a poll of manufacturers anticipates slight output decline of -0.2% in July, followed by climb of 1.1% in August.

                                      Also released, retail sales rose 5.9% yoy in June, above expectation of 5.4% yoy, picked up from prior month’s 5.7% yoy.

                                      US initial jobless claims dropped to 6.6m, continuing claims more than doubled to 7.46m

                                        US initial jobless claims dropped -261k to 6,606k in the week ending April 4. Four-week moving average of initial claims rose 1,599k to 4,266k.

                                        Continuing claims rose 4,396k to 7,455k in the week ending March 289, highest on record. Four-week moving average of continuing claims rose 1,439k to 3,500k.

                                        Full release here.

                                        US durable goods orders down -5.2% as transport equipment fell -14.2%

                                          US durable goods orders dropped -5.2% mom to USD 285.9B in July, worse than expectation of -4.0% mom. Ex-transport orders rose 0.5% mom to USD 187.2B, above expectation of 0.2% mom. Ex-defense orders dropped -5.4% mom to USD 270.9B. Transportation equipment fell -14.2% mom to USD 98.7B.

                                          Full US durable goods orders release here.