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Charting Global Economy: US Employment, Manufacturing Power Up – BNN

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(Bloomberg) — Job growth and manufacturing in the U.S. powered ahead at end of the first quarter as a robust pace of coronavirus vaccinations, fewer restrictions on business and fiscal support generate a stronger tailwind for the economy.

Sweden, Norway and Russia are among countries on pace to return to pre-pandemic levels of growth by year-end, while Covid-19 infections continue to haunt emerging economies such as Brazil.

The pandemic may have expedited China’s bid to overcome the U.S. as the world’s largest economy later this decade.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

U.S.

Employers added the most jobs in seven months with improvement across most industries in March, as more vaccinations and fewer business restrictions supercharged the labor market recovery in the world’s largest economy.

Manufacturing expanded in March at the fastest pace since 1983, catapulted by the firmest orders and production readings in 17 years, adding to evidence of an economy poised to accelerate.

The average time it takes for production materials to reach U.S. factory floors is now the longest on record, the ISM report showed. The purchasing managers group said lead times stretched to 75 days in March from 67 days a month earlier. Shortages of basic materials, higher input prices and difficulties in transporting products are creating headaches for an otherwise robust factory sector.

Europe

Russia’s economy continued to rebound from its pandemic-induced recession in the fourth quarter of 2020, easing its contraction as President Vladimir Putin opted against imposing a second national lockdown.

By the end of 2021, Bloomberg Economics forecast output will exceed its pre-pandemic level in Sweden and Norway. That’s set to bring interest rate increases into view.

Home working is likely to remain after the pandemic finishes, according to a survey of 2,000 companies the U.K., most of which are planning to allow employees greater flexibility on where and when they do their jobs.

Asia

Since the 1970s, China has been racing to become the world’s largest economy. Its recovery from the pandemic means it could eclipse the U.S. this decade.

Returning to a high growth path will be the easy part for South Asian economies led by India, which confront much harder challenges in the form of increased inequalities and reduced access to education in the wake of the pandemic, according to the World Bank.

Emerging Markets

Brazil’s unemployment rate rose as another, more contagious wave of the coronavirus began spreading across the nation.

Countries across Asia are trying everything from fertility tours to baby bonuses to spur population growth in an aging world. Not so in Indonesia, where officials are trying to convince people to have fewer children.

World

Bloomberg Economics’ nowcasts of GDP growth across major economies show output for a significant chunk of the world economy poised to move above the pre-crisis peak, but with a widening divide as China and the U.S accelerate out of the slump, and European countries sink lower.

The International Monetary Fund is preparing to give its member countries the biggest resource injection in its history, $650 billion, to boost global liquidity and help emerging and low-income nations deal with mounting debt and Covid-19.

©2021 Bloomberg L.P.

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Canadian dollar notches biggest gain in a month as stocks rally

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The Canadian dollar strengthened to a one-week high against its U.S. counterpart on Thursday as investor sentiment picked up and domestic data showed that retail sales fell less than expected in July.

World stock markets rallied and the safe-haven U.S. dollar retreated from one-month highs as worries about contagion from property developer China Evergrande eased and investors digested the Federal Reserve’s plans for reining in the stimulus.

Canada is a major exporter of commodities, including oil, so the loonie tends to be particularly sensitive to investor appetite for risk.

“The assumption here is that (Fed interest) rate hikes are still a long way out and so equities markets can still perform with accommodative financial conditions,” said Mazen Issa, senior FX strategist at TD Securities in New York.

“Consequently, currencies that have a higher beta to the equity market, like the CAD, can do alright.”

U.S. crude oil futures settled 1.5% higher at $73.30 a barrel, while the Canadian dollar was trading up 0.9% at 1.2653 to the greenback, or 79.03 U.S. cents.

It was the currency’s biggest advance since Aug. 23. It touched its strongest level since last Thursday at 1.2628.

Canadian retail sales dipped 0.6% in July, compared with expectations for a decline of 1.2%, while a preliminary estimate showed sales rebounding 2.1% in August.

Canadian government bond yields were higher across a steeper curve, tracking the move in U.S. Treasuries.

The 10-year touched its highest level since July 14 at 1.335% before dipping to 1.330%, up 11.6 basis points on the day.

(Reporting by Fergal Smith; Editing by Nick Zieminski and Peter Cooney)

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China Vows Better Policy Support to Economy as Headwinds Mount – BNN

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(Bloomberg) — Chinese policy makers reiterated the need to fine-tune economic policies as the world’s second-largest economy faces increasing headwinds from virus outbreaks and high commodity prices. 

Policy should be preemptive and coordinated across cycles, the State Council, the equivalent of China’s cabinet, said in a statement after a meeting chaired by Premier Li Keqiang Wednesday. Governments at all levels should maintain the continuity and stability of macroeconomic policies and enhance their effectiveness, while also do a good job in preventing and controlling virus cases, it said.

Efforts are needed to better coordinate fiscal, financial and employment policies in order to “stabilize reasonable expectations by the market,” it said. 

China again vowed to make sure the economy is operating within a reasonable range, with further measures to boost consumption, guiding private capital to play a better role in expanding investment, and ensuring stable growth in foreign trade and foreign capital, according to the statement. While the employment situation is stable this year, efforts are still needed to maintain employment and help companies, it said. 

The economy took a knock in August from stringent virus controls and tight curbs on property. While China’s Covid zero approach helped to quickly quash the infections, retail sales growth suffered, slowing to 2.5% in August. 

Facing the continued commodity boom, the State Council also pledged to use more market-based measures to stabilize commodity prices and ensure supplies of power and natural gas during the winter. 

©2021 Bloomberg L.P.

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UAE Says It's Unwinding Pandemic Stimulus as Economy Recovers – Bloomberg

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The United Arab Emirates has begun winding down an economic support program launched in response to the coronavirus pandemic as the economy shows signs of gradual recovery, the central bank said in a statement.

The reduced reserve requirements for banks won’t change for now and neither will the lower loan-to-value ratio required for first-time home buyers seeking mortgage loans, the bank said. The loan deferral component of the Targeted Economic Support Scheme will expire by the end of 2021 with financial institutions able to carry on tapping a collateralized 50-billion-dirham ($13.6 billion) liquidity facility until the middle of 2022, in line with earlier guidance.

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