Connect with us

Economy

Charting the Global Economy: Retail Sales Firm in U.S., China – Financial Post

Published

 on


Article content

(Bloomberg) — Retail sales strengthened in both the U.S. and China last month, suggesting still-healthy consumer spending in the two largest economies even against a backdrop of rising prices.

Price increases continue to broaden, supporting the idea that inflation will prove more persistent than thought. The cost of goods and services from tobacco to electricity rose in the U.S. last month, while energy costs in the U.K. helped drive inflation to the highest reading in nearly a decade. 

Advertisement

Article content

Meantime, Europe is once again resorting to lockdowns and imposing restrictions on the unvaccinated to stem the latest wave of Covid-19 infections that threatens to overwhelm the continent’s health systems.

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

U.S.

Federal Reserve Chairman Jerome Powell’s inflation dashboard is starting to show some signs of overheating. From spreading price increases to rising wages, it’s signaling more caution on the inflation front than when Powell unveiled the benchmarks less than three months ago.

Retail sales rose in October for a third month, signaling households continue to spend even with the fastest inflation in decades. The value of purchases increased 1.7%, the most in seven months. The data aren’t adjusted for price changes.

Advertisement

Article content

Europe

U.K. inflation climbed more than expected to the highest in a decade, tightening a squeeze on living standards for households. Consumer prices rose 4.2% in October from a year ago, driven by energy costs and the impact of broad-based supply shortages across the economy.

Inflation is dealing a fresh blow to the low-income workers whose finances fared worst when Covid-19 swept across Europe. Many toward the bottom of the pay scale burned through savings as lockdown-induced furlough programs only partially covered their wages. Now, soaring energy and food costs are swallowing a disproportionate chunk of earnings to complete a double whammy.

Asia

China’s economy performed better than expected in October as retail sales climbed and energy shortages eased, though a slump in property and rising Covid outbreaks show the recovery isn’t yet on solid ground. Industrial output rose 3.5% in October from a year earlier, while retail sales growth accelerated to 4.9%, beating economists’ forecasts.

Advertisement

Article content

Japan’s exports increased in October at the slowest pace in eight months as car shipments continued to slump, adding to signs that global supply constraints are still weighing on the economy.

Emerging Markets

Pakistan’s central bank raised its key interest rate by more than expected in a second consecutive hike aimed at arresting Asia’s fastest inflation and stemming a decline in the rupee.

South Korea’s household income increased by a record last quarter, bolstered by a recovering economy and cash handouts from the government’s pandemic relief plan.

The money that foreigners globally send to their home countries is set to reach a record this year, fueled by transfers to Latin America and migrants headed for the U.S., according to forecasts from the World Bank.

World

Financial markets are fixated on how the world’s central banks will adjust monetary policy as they grapple with inflation. But it’s fiscal tightening — the withdrawal of pandemic spending — that will likely have more impact on the global economy next year.

Austria will become the first western European country to impose widespread restrictions after curbs on unvaccinated people failed to stem a surge in new infections. It will also become the first European country to mandate Covid-19 shots as it seeks to exit the crisis.

©2021 Bloomberg L.P.

Bloomberg.com

Advertisement

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

Adblock test (Why?)



Source link

Continue Reading

Economy

Exclusive-Trudeau to limit new spending in fiscal update – source

Published

 on

Canadian Prime Minister Justin Trudeau‘s government will outline limited new spending in a fiscal update expected later this month, a source said on Thursday, as inflation soars and some business groups and opposition politicians call for restraint.

Fresh investments in the so-called fall fiscal update will be “limited in scope”, a source familiar with the drafting of the document told Reuters.

This fiscal update will be similar to those released following the 2015 and 2019 elections, the source said. Other years when elections were not held, the fiscal update has been more substantial, like a mini-budget.

After COVID-19 supports for businesses and individuals produced the highest deficit since World War Two last year, Trudeau during his campaign pledged C$78 billion ($60.9 billion)in new spending over five years to foster Canada‘s economic rebound.

“This will be an update on where the nation’s finances are right now,” the source said of the document. “We certainly have an ambitious plan that we will continue to move forward on. That’s why you have a budget.”

The government is expected to release its 2022-23 fiscal-year budget during the first part of next year. Inflation is at an 18-year high and is being driven mainly by supply chain problems and energy price gains, but some fear more government spending will make it worse.

This year’s budget included C$101 billion investments over three years.

“There’s a major concern that people have about the level of government spending, and whether or not it is fueling inflation and fueling demand,” said Perrin Beatty, president and CEO of the Canadian Chamber of Commerce.

The prospect of rising interest rates next year, as signaled by the Bank of Canada, will increase the servicing costs on the country’s debt, Beatty said.

‘JUSTIN-FLATION’

Pierre Poilievre, the finance critic for the opposition Conservative Party, blames Trudeau for stoking inflation, which he calls “Justin-flation”, with excessive government spending.

“We’re going to be prudent,” a second source familiar with the government’s plans said.

“The prudent thing is to wait and just see how the next couple of months unfold and you always reserve the option in the winter budget to do more,” said Rebekah Young, director, fiscal and provincial economics at Scotiabank. “It’s harder to roll back than it is to roll out more programs in the winter.”

Already in October, Finance Minister Chrystia Freeland indicated Canada would significantly scale back spending on pandemic support programs now that more than 85% of the eligible population was vaccinated against COVID-19.

Fitch Ratings was the only ratings agency to strip Canada of a triple-A credit rating during the pandemic.

“A combination of strong revenue recovery and fiscal restraint would put the federal debt and broader general government debt each on a faster reduction course,” Kelli Bissett-Tom, Fitch’s director of Americas sovereign ratings, said on Thursday.

In April, Freeland said debt as a percentage of output would progressively decline, providing a fiscal anchor going forward. In the budget, debt was forecast to be 51.2% of gross domestic product this fiscal year, falling to 50.7% the following year.

Revenues were up C$47.0 billion, or 36.5%, in the April-September period, according to the Department of Finance.

There was no immediate comment from the prime minister’s office. The finance ministry declined to comment.

($1 = 1.2811 Canadian dollars)

 

(Reporting by Steve Scherer in Ottawa and Fergal Smith in Toronto,; Editing by Chizu Nomiyama and Alistair Bell)

 

Continue Reading

Economy

B.C. economy poised to slow after ‘unsustainable’ 2021 – Business in Vancouver

Published

 on


B.C. construction workers | Chung Chow, BIV

B.C.’s economy is set to ride the wave of consumer savings and increases in immigration next year despite this fall’s catastrophic flooding.

And while growth is the forecast, economists at the Royal Bank of Canada (TSX:RY) predict economic expansion won’t be hitting the heights 2021’s “unsustainable” 5.6% growth.

Instead, Robert Hogue and Carrie Freestone are forecasting growth to reach 4.2%, according to an outlook published Thursday. That’s slightly lower than the 4.3% growth they project for the national economy.

“B.C. consumers still have a lot of savings fire power to deploy on goods and services purchases. The resumption of immigration will further stimulate consumption and investment,” the pair said in the report, referring to Ottawa’s plans to bring 1.2 million newcomers into the country over the next three years to help stimulate the economy.

The outlook also concludes the wider reopening of the border with the U.S. will spur the tourism sector, while work on major projects such as the Trans Mountain pipeline, the Site C dam, LNG Canada’s facility in Kitimat and the Coastal Gaslink pipeline will also keep the economy moving.

The forecast does not take into account the potential for restrictions brought on by the emergence of the new COVID-19 variant known as Omicron. 

Much uncertainty still remains over the severity of this variant, but the federal government has spent the past week deploying new travel restrictions in an effort to clamp down on its transmission. Cases have already been reported in Canada after Omicron was initially identified in southern Africa.

“To be sure, November’s massive floods pose significant near-term challenges for transportation, agriculture, forest products and many other industries. We expect disruptions to the broader provincial economy to ease fairly quickly as repair work [restores] key transportation corridors – though some communities face a much more difficult recovery,” the RBC report said. 

“In fact, repair work will add to provincial economic growth, whereas the destruction of property and infrastructure will largely go unaccounted for in GDP numbers.”

B.C. Construction Association president Chris Atchison and Brynn Bourke, executive director of the B.C. Building Trades union organization, both told BIV this week the industry is still assessing the full extent of the repair work needed.

Business Council of B.C. CEO Greg D’Avignon said last month that while some parts of the economy will benefit from the rebuild effort, he’s concerned it will come at the cost of government revenue at the same time revenue is being constrained amid a dip in economic activity.

He said the BCBC would be cutting its 2021 forecast for the provincial economy – originally pegged at 5.8% back in August – in the wake of the floods.

Economists at the Bank of Montreal (TSX:BMO) last week downgraded this year’s outlook, dropping it from 5.3% growth to 3.8% growth.

torton@biv.com

@reporton

Adblock test (Why?)



Source link

Continue Reading

Economy

How Omicron Could Knock Economic Recovery Off Track – The New York Times

Published

 on


[unable to retrieve full-text content]

How Omicron Could Knock Economic Recovery Off Track  The New York Times



Source link

Continue Reading

Trending