Global Economic Summary: June 10-15, 2024
United States
- Economic Growth and Jobs: The US labour market continued to show resilience, with nonfarm payrolls increasing by 272,000 in May, pushing the unemployment rate to 4%. Real average hourly earnings rose by 0.8% YoY, indicating wage growth outpacing inflation.
- Inflation: The CPI remained flat at 0.0% MoM for May 2024, with a YoY increase of 3.3%. The PPI declined by -0.2% MoM, suggesting easing cost pressures.
- Federal Reserve: Fed officials signaled only one rate cut for 2024, a shift from the previous forecast of three cuts. The Fed’s inflation expectations were adjusted with a median rate forecast of 5.125% for 2024.
United Kingdom
- Economic Growth: GDP remained unchanged in April, indicating stagnant economic growth, which poses a challenge for Prime Minister Rishi Sunak’s election campaign.
- Jobs and Wages: Wage growth remained steady at 5.9% in the three months to April. However, there were mixed signals in the labour market with an increase in unemployment and jobless claims.
- Political Developments: Labour deputy leader Angela Rayner emphasized that Labour will not seek to rejoin the EU or its single market but aims to improve the UK’s trade deal with the EU.
Eurozone
- Inflation and Monetary Policy: ECB officials, including Lagarde and Guindos, indicated a cautious approach to lowering borrowing costs amidst volatile inflation. Core inflation remains a concern.
- Political Developments: French President Macron announced snap parliamentary elections. Left-leaning political parties formed an alliance to challenge Marine Le Pen’s National Rally in the upcoming elections.
Japan
- Inflation and Economic Growth: PPI rose by 2.4% YoY in May due to higher renewable energy surcharges. Japan’s holdings of foreign securities dropped significantly, indicating the government’s intervention to support the yen.
- Government Actions: The Japanese government acknowledged its intervention in the currency market, with data showing substantial foreign security sales to support the yen.
China
- Economic Data: CPI rose by 0.3% YoY in May, with core inflation up 0.6%. The Caixin manufacturing PMI increased to 51.7, reflecting some improvement in manufacturing activity.
- Business and Trade: Chinese businesses are increasingly investing in countries like Vietnam and Mexico amidst rising trade tensions with the West.
Australia
- Labor Market: The unemployment rate fell to 4% in May, with the economy adding 39.7k jobs, driven by full-time employment, indicating a resilient labour market.
- Economic Growth: GDP grew by 0.1% QoQ in Q1 2024, below expectations, which may pressure the Reserve Bank to reconsider its policy stance.
AI and Technology
- Corporate Moves: OpenAI appointed retired US Army General Paul Nakasone to its board to enhance cybersecurity. Mistral AI raised €600 million in new funding, and Nvidia’s market cap surged, driven by demand for AI chips.
- Market Dynamics: AI and technology sectors continue to attract significant investments, with Apple integrating AI features into its devices and Saudi investments supporting Chinese AI startups.
Environmental, Social, and Governance (ESG)
- Investor Sentiment: Global investors have withdrawn a net $40 billion from ESG equity funds this year, citing poor performance and political pressures.
- Regulatory Developments: The EU faces pressure to ease its landmark climate law amid rising political demands.
Summary Conclusion
The global economic landscape from June 10 to 15, 2024, reflects a cautiously optimistic outlook with resilient labour markets in the US and Australia, easing inflationary pressures, and cautious monetary policies from major central banks. Political developments in the UK, Eurozone, and Japan, alongside significant investments in AI and ESG sectors, continue to shape economic conditions and investment strategies worldwide.