(Bloomberg) — Inflation cooled in the US as well as several European countries in recent readings, offering encouraging signs that central banks in the regions can lower interest rates.
The Federal Reserve’s preferred measure of underlying US inflation increased 0.1% in May, the smallest advance in six months. Consumer prices in France — the euro area’s second-largest economy — slowed a bit in June, while inflation retreated in Spain as well.
It was a different story in Asia, where inflation quickened in Tokyo — a leading indicator of the national data to be released in July — as well as in Australia, which may prompt those policymakers to raise rates.
Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy, markets and geopolitics:
US
The so-called core personal consumption expenditures price index, which strips out volatile food and energy items, increased 0.1% from the prior month. That marked the smallest advance in six months. Inflation-adjusted consumer spending posted a solid advance after a pullback in April, driven by goods and fueled in part by a jump in incomes.
The inventory of new US homes stands at the highest since the bursting of the housing bubble more than a decade ago, raising the risk that builders will dial back production in a market longing for cheaper borrowing costs. Nearly 100,000 of those have already been completed and are still awaiting a buyer, the most in more than 14 years.
Of all the battleground states in the US presidential election, none is a greater puzzle for Joe Biden and Donald Trump than Nevada. That’s because the state – with its relatively sparse population and high proportion of Spanish-speaking residents – is unusually difficult to poll.
Europe
French inflation slowed a little — reinforcing the European Central Bank’s decision to begin cutting record-high interest rates and offering an economic bright spot for President Emmanuel Macron two days before elections. A separate release showed inflation in retreat in Spain as well. In Italy, inflation ticked up but remained below 1%.
The Riksbank kept borrowing costs unchanged and said it expects to resume easing again with as many as three cuts in the second half of the year. The Swedish central bank, which held its interest rate at 3.75%, said that consumer-price growth is turning out largely as it anticipated, allowing for further reductions in the benchmark in due course.
Asia
Inflation in Tokyo picked up in June on the back of higher energy prices and industrial output rose more than expected in May, likely keeping the Bank of Japan on track to consider an interest-rate hike as early as July. The weak yen helped underpin price growth in June, and it’s stayed under pressire, trading around 160.60 to the dollar Friday morning in Tokyo.
Australia’s inflation accelerated faster than expected for a third straight month in May, sending the currency higher as traders boosted bets that the Reserve Bank will resume raising interest rates at its next meeting. The report comes after RBA Governor Michele Bullock restated last week that the rate-setting board isn’t ruling out a rate hike after leaving the benchmark at a 12-year high of 4.35%.
China’s fiscal revenue shrank at the fastest pace in more than a year, fueling expectations that the government could make another rare mid-year budget revision to aid an economic recovery. The government’s budget has been under strain as slowing economic growth weighed on tax income, while a multiyear property market downturn slashed its income from land sales.
Emerging Markets
Prime Minister Narendra Modi’s government is considering consumption-boosting measures worth more than 500 billion rupees ($6 billion) in India’s upcoming budget, including tax cuts for lower income individuals for the first time in seven years, according to people familiar with the matter.
Confidence among South Africa’s agricultural businesses fell to the lowest level in almost 15 years as an El Niño-induced drought affected grain crops. The drought coincided with other long-standing challenges, such as inadequate road infrastructure and municipal service delivery. Lingering animal disease challenges and heightened geopolitical tensions are also the concerns for the sector, according to the business chamber.
Pakistan is set to launch a security operation to contain a surge in terrorist attacks that have targeted China’s infrastructure projects and its citizens as Islamabad seeks to bolster economic ties with Beijing. The two governments are looking to revive projects on the China Pakistan Economic Corridor, an infrastructure network of roads, railways and ports under the Belt and Road initiative.
World
Sweden, Guatemala, the Philippines, Turkey and Mexico held. The Czech central bank signaled it’s likely to slow or may even halt rapid monetary easing as officials aim to prevent inflation from staging a comeback. Morocco cut rates for the first time in four years. Colombia also lowered borrowing costs.
Exxon Mobil Corp. took the first step toward its seventh oil project in Guyana, a clear signal the supermajor intends to expand crude output from the South American nation into the next decade.
–With assistance from Ruchi Bhatia, Kevin Crowley, Ismail Dilawar, Kamran Haider, William Horobin, John Liu, Gregory Korte, Swati Pandey, Niclas Rolander, Augusta Saraiva, Michael Sasso, Zoe Schneeweiss, Rene Vollgraaff, Fran Wang and Erica Yokoyama.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
