10 Things You Need to Know: July 9, 2024
Key data releases this week include: NFIB Small Business Optimism (Tue), Jerome Powell Congressional Testimony (Tue, Wed), CPI (Thu), PPI (Fri), and consumer sentiment (Fri).
Haver
July 5, 2024
Nonfarm payrolls increased 206,000 (1.6% y/y) in June after rising 218,000 in May and 108,000 in April. Expectations had been for a 200,000 rise in the Action Economics Forecast Survey. Average hourly earnings increased an expected 0.3% in June. The unemployment rate, measured in the household survey, rose to 4.1% in June from 4.0% in May.
Haver
July 3, 2024
The U.S. ISM Services PMI fell to 48.8 in June after rising to 53.8 in May, indicating contraction in the services sector for the second time in three months and for the third time in 49 months. The Action Economics Forecast Survey had expected 52.5 for June. The prices paid index decreased to 56.3 in June after falling to 58.1 in May.
Capital Economics
July 8, 2024
The results of France’s parliamentary elections mean it should avoid the large, unfunded fiscal expansion that two of the three major political groups were advocating. But it also means France is very unlikely to be able to reduce the deficit as required by EU rules, and the political outlook is also unstable. As a result, we expect French government bond spreads to remain higher than they were before the election.
Bloomberg
July 8, 2024
“The Chinese domestic economy remains soft and there’s little expectation for stimulus from the third Plenum,” said Xin-Yao Ng, director of investment at abrdn Asia Ltd. “There is some negative sentiment from the elections in Europe with uncertainties around its attitude toward China with more left- wing parties taking influence.”
Bloomberg
July 2, 2024
Japan’s economic outlook for 2024 has taken a downturn as economists from BNP Paribas and SMBC Nikko Securities revised their forecasts to predict a contraction, following a sharp downward revision of first-quarter GDP data. BNP expects a 0.4% shrinkage, while SMBC forecasts a 0.3% decline. Both economists had previously forecast expansions.
Capital Economics
July 3, 2024
The EM business cycle is unusually unsynchronized. We expect some convergence as the effects of the enormous macro shocks of recent years wash out. However, we shouldn’t expect EMs to perform in the more homogenous way seen in the 2000s and early 2010s.
Bloomberg
July 2, 2024
Greece has become the first EU country to introduce a six-day working week. The regulation, which came into force on July 1, bucks a global trend of companies exploring whether to embrace a shorter working week. The pro-business government of Prime Minister Kyriakos Mitsotakis has reportedly said the measure is both “worker-friendly” and “deeply growth-orientated.” Labor unions and political analysts have sharply criticized the move.
Barron’s
July 8, 2024
A survey of 166 chief information officers, who are responsible for $123 billion in annual enterprise tech spending, suggests that generative-AI hardware spending could rise by more than 40% annually over the next three years going from 5% of IT budgets this year to 14.5% in 2027. Meanwhile, nearly half of enterprises shifted from an AI testing phase to an implementation phase over the past year.
Oxford Economics
July 5, 2024
The June employment report was weaker than expected and adds support to our forecast for the Fed to cut rates in September and then lower rates at every other meeting thereafter until reaching a terminal rate of 2.75 per cent. We think the Fed will want to avoid a scenario where layoffs do start to rise, triggering a cycle of weaker consumer spending and economic growth, leading to further job losses and a rise in unemployment.