Week 10 | March 6 – 10, 2023
Mr. Van Loven A. Abbu, LPT
SUMMARY
United States (USD) Highlights:
US Jobless Claims Jump to 211K, Surpassing Market Expectations:
The number of people claiming unemployment benefits increased by 21,000 from the previous week to 211,000 in the week ending March 4th, the highest level since December 2022 and much above market predictions of 195,000. The most recent result was the first positive surprise in a month, deviating from a string of labor data that highlighted a stubbornly tight labor market and hinted that labor conditions may begin to loosen. The four-week moving average, which accounts for week-to-week volatility, increased by 4,000 points to 197,000. Claims increased by 35,357 to 237,513 on a non-seasonally adjusted basis, with large increases in North Carolina (+16,364) and California (+10,489).
Source: U.S. Department of Labor
US Job Openings Fall, Construction and Hospitality Industries Hit Hardest:
The number of job opportunities in the United States declined by 410,000 in January 2023 to 10.824 million from an upwardly revised 11.234 million in December, falling short of market estimates of a 10.5 million reduction. The highest monthly declines were in construction (-240,000), accommodation and food services (-204,000), and banking and insurance (-204,000). (-100,000). Nevertheless, the number of available opportunities in transportation, storage, and utilities grew (+94,000) and in nondurable product manufacturing (+50,000). Nevertheless, the overall number of hiring and separations remained stable at 6.4 million and 5.9 million, respectively. Quits fell to 3.884 million, the lowest level since May 2021, while layoffs and discharges increased to 1.7 million.
Source: U.S. Bureau of Labor Statistics
Labor Market Continues to Exude Resilience as US Job Growth Exceeds Forecast:
The US economy unexpectedly added 311K jobs in February 2023, much above market expectations of 205K and coming on the heels of a downwardly revised 504K in January. The number indicates that the labor market is tight, with the economy adding 343K jobs per month on average during the previous six months. It is also far more than the 100K per month thought essential to keep up with the rise in the working-age population. Significant employment growth occurred in leisure and hospitality (105K), including food services and drinking places (70K); retail trade (50K), specifically general goods stores (39K); government (46K); professional and business services (45K); health care (44K); and construction (44K) (24K). On the other hand, employment in the information business (-25K), specifically motion picture and sound recording (-9K), and telecommunications has decreased (-3K). Since November 2022, employment in information has declined by 54K. 22K jobs were also lost in transportation and warehousing.
Source: U.S. Bureau of Labor Statistics
US Unemployment Rate Rises to 3.6% in February, Above Market Expectations:
The unemployment rate in the United States increased to 3.6 percent in February 2023, up from 3.4 percent in January and above market predictions of 3.4 percent. Unemployment climbed by 242 thousand to 5.94 million, while employment increased by 177 thousand to 160.32 million. The U-6 unemployment rate, which includes those who want to work but have given up looking and those who work part-time because they cannot find full-time work, increased to 6.8 percent in February from 6.6 percent in January. The labor force participation rate rose to 62.5 percent, its highest level since March 2020.
Source: U.S. Bureau of Labor Statistics
Canada (CAD) Highlights:
Canadian economic expansion slows in February: Ivey PMI falls to 51.6:
The Canadian Ivey Purchasing Managers Index slipped to 51.6 in February 2023, down from an eight-month high of 60.1 the previous month, falling short of experts’ forecasts of 55.9. According to the most recent data, Canadian economic activity expanded significantly more slowly in February, as the rate of job creation slowed (59.4 versus 60.5 in January) and inventories climbed (53.7 vs 52.7). However, supplier delivery times increased (55.8 vs 52.3), and inflation rose (65.3 vs 63.6).
Source: Richard Ivey School of Business
Balance of Trade 9:30 PM March 8:
In January 2023, Canada had a trade surplus of CAD 1.92 billion, up from a revised surplus of CAD 1.2 billion the previous month and contrasted to market estimates of a CAD 60 million loss. In January, total exports increased by 4.2% over the previous month to CAD 67 billion, with notable increases in agriculture, fisheries, and intermediate food products (11.9% to CAD 5.9 billion) and motor vehicles and components (8.2% to CAD 8.3 billion). Increased sales of metal and non-metallic mineral ores were also recorded (8.3% to CAD 7.5 billion), but lower natural gas prices hampered energy product exports (-1.8% to CAD 15.5 billion). Meanwhile, imports climbed by 3.1% to CAD 65.1 billion, owing to higher purchases of motor vehicles and parts (11.1% to CAD 11 billion) and industrial machinery, equipment, and parts (10% to CAD 8.2 billion).
Source: Statistics Canada
Bank of Canada halts interest rate hike campaign as GDP growth stalls in Q4 2022:
In its March 2023 meeting, the Bank of Canada maintained its overnight rate goal of 4.5%, as previously announced, and noted that it should maintain the rate at the present level if economic circumstances develop broadly in accordance with projections in the latest Monetary Policy Report. After a 25 basis point interest rate boost in January, the move represented the first stop in the tightening campaign for major monetary authorities, as the Bank of Canada chose to alter its emphasis and promote growth. Canadian GDP growth stalled in the fourth quarter of 2022, lower than projections from the central bank. In the meantime, lower energy prices support the slowdown in consumer prices, strengthening the case for a pause in the bank’s tightening cycle. Inflation slowed to 5.9% in January since hitting its peak of 8.1% in June, and the bank continues to expect inflation to fall to 3% in the middle of the year
Source: Bank of Canada
Canadian job market remains tight with unemployment rate close to record low:
The Canadian unemployment rate remained stable at 5% in February 2023, close to the record low of 4.9% witnessed in June and July 2022, and outperforming market expectations of 5.1%. The outcome provided more evidence of a chronically tight labor market, casting doubt on the Bank of Canada’s assumptions that recent poor economic growth would put pressure on the employment market. The number of unemployed climbed by 20,400 from the previous month to 1,066,400, as lower unemployment among older males offset greater unemployment among core-aged women. Yet, the Canadian economy created 21,800 jobs over time, more than double projections, with significant growth in goods-producing industries (+0.4% to 4,158,400). Nevertheless, the number of employment in service-producing industries remained stable at 15,895,700.
Source: Statistics Canada
Canadian employment rises in February, beating market expectations with 21.8 thousand jobs created:
In February 2023, the Canadian economy added 21.8 thousand jobs, above market forecasts of a ten thousand rise. Health care and social assistance (+15,000; +0.6%), public administration (+10,000; +0.9%), and utilities (+7,500; +5.0%) all had increases in employment. Simultaneously, fewer persons worked in business, construction, and other support services (-11,000; -1.5%). The number of employees in the private sector increased (+39,000; +0.3%), while employment in the public sector and the number of self-employed remained stable.
Source: Statistics Canada
Australia (AUD) Highlights:
Australia’s trade surplus narrows to AUD 11.7bn in January on slower exports growth:
Australia’s trade surplus fell to AUD 11.69 billion in January 2023, down from AUD 12.99 billion in December 2022 and falling short of market expectations of an AUD 12.5 billion gain. The trade surplus was the lowest since August, as exports increased less than imports. Shipments increased 1.4% from the previous month to a three-month high of AUD 58.85 billion, driven by continued global demand and the removal of China’s severe COVID restrictions. Nevertheless, imports increased at a quicker 4.6% to a four-month high of AUD 47.16 billion as domestic demand increased owing to the economy’s complete reopening.
Source: Australian Bureau of Statistics
Reserve Bank of Australia raises cash rate to 3.6%, marking the sharpest annual tightening since 1989:
At its March meeting, the Reserve Bank of Australia increased the cash rate by 25 basis points to 3.6%, in line with market expectations. The rate rise on Tuesday was the tenth since May 2022, bringing borrowing prices to record levels in May 2012. The 350bps increase was also the most significant yearly tightening since 1989. The RBA stated that the monthly CPI indicator indicated that inflation had peaked, but that further tightening would be dependent on incoming economic data. The board wants inflation to return to the 2-3% area. At the same time, it forecasts inflation to be 4-3/4% this year and around 3% by mid-2025. The committee stated that it will keep the economy on track, but the road to a gentle landing remains tight. The committee predicted that Australia’s GDP growth will remain below trend in the next years due to a downturn in household consumption and home development. In addition, the RBA boosted the interest rate on Exchange Settlement balances by 25 basis points to 3.5%.
Source: Reserve Bank of Australia
Japan (JPY) Highlights:
No Changes to Yield Curve Control by Bank of Japan During March Meeting:
During its March meeting, the Bank of Japan (BoJ) unanimously maintained its benchmark short-term interest rate at -0.1% and that for 10-year bond yields at roughly 0%. The central bank also made no changes to yield curve management, including a 0.5% restriction on bond purchases, damping expectations that the policy’s adverse effects would be addressed shortly. Nonetheless, authorities expressed their concerns about the economy by decreasing their forecasts for exports and output while maintaining their overall economic assessment. The Bank of Japan underlined that it will consider more easing measures if necessary while anticipating short- and long-term policy interest rates to remain at current or lower levels. The meeting on Friday was Governor Haruhiko Kuroda’s penultimate session before retiring; his replacement, Kazuo Ueda, will take office in April. The incoming governor will preside over his first policy meeting on April 27-28, when the board will issue new quarterly growth and pricing predictions through the fiscal year 2025.
Source: Bank of Japan
United Kingdom (GBP) Highlights:
UK economy bounces back with 0.3% growth in January, led by a rebound in the services sector:
The British economy grew 0.3% month on month in January 2023, largely recovering after a 0.5% decline in December due to strikes, and surpassing market expectations of a 0.1% increase. The services sector grew by 0.5% in January, rebounding from a 0.8% drop in December, and was the main driver of growth, led by education (2.5%), as school attendance levels returned to normal levels; transportation and storage (1.6%); human health activities (0.7%), and arts, entertainment, and recreation activities (3.4%), in a month when Premier League football returned to a full schedule. Consumer-facing service output increased by 0.3% after falling by 1.2%. Production output, on the other hand, declined by 0.3% after increasing by 0.3% in December, followed by a 0.4% reduction in manufacturing, especially basic pharmaceutical items and pharmaceutical preparations (-4.7%). The building was also down (-1.7%). GDP was unchanged in the three months leading up to January.
Source: Office for National Statistics
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