Week 14 | April 3 – 7, 2023
Mr. Van Loven A. Abbu, LPT
United States (USD) Highlights:
US Manufacturing Activity Contracts for Fifth Consecutive Month in March:
In March 2023, the ISM Manufacturing PMI dropped to 46.3, its lowest level in over three years. This suggests that worries about a future recession and increasing interest rates are beginning to affect businesses. According to the study, manufacturing activity shrank for a fifth consecutive month as businesses reduced production to better meet demand for the first half of the year and get ready for growth in the second half of 2023. Decreases in employment, backlogs of orders, and new orders were other factors contributing to the reduction. While this was going on, output was still declining, stockpiles were contracting, and supplier deliveries were the slowest since March 2009. Positively, price pressure decreased even further, which may indicate that inflation is reducing.
The ISM score of 46.3, which is significantly lower than the consensus expectation of 47.5, points to a downturn in the manufacturing sector. Employment decreased from 49.1 to 46.9 as new orders declined from 47 to 44. Supplier deliveries fell to 44.8, the lowest level since March 2009, while production dropped to 47.8 from 47.3. Given that manufacturing is a major contributor to growth, the recession in that sector is likely to have an effect on the entire economy. Additionally, the decline in the PMI may be a sign that the US economy is slowing down following a time of expansion, which might have an impact on both investors and policymakers.
Source: Institute for Supply Management
US Job Openings Fall to 9.9M, Lowest Since May 2021:
The number of job opportunities in the US dropped by 632,000 to 9.9 million in February 2023, which was below market estimates and the lowest level since May 2021. The decrease in job opportunities raises the possibility that the labor market has begun to cool. This may be due to the lingering uncertainty surrounding the epidemic and the increased cost of borrowing, which may be preventing firms from filling open positions. Particularly striking were the industries of professional and commercial services, health care and social support, and transportation, storage, and utilities where there were fewer job vacancies. However, the sectors of construction and arts, leisure, and recreation saw an increase in employment vacancies.
The US Bureau of Labor Statistics reports that at 6.2 million and 5.8 million, respectively, the overall number of hiring and separations remained practically steady. Layoffs and discharges reduced to 1.5 million, but resignations rose to 4.0 million in terms of total separations. This might mean that employees are quitting their existing employment freely because they feel more confidence in their ability to locate new ones. However, the decline in job vacancies may reduce the amount of fresh possibilities offered to employees, thereby having an effect on the state of the labor market as a whole.
Source: U.S. Bureau of Labor Statistics
US Private Sector Job Growth Slows in March 2023, Adding 145K Jobs:
The US’s private sector created 145K new jobs in March, indicating a slowdown in hiring caused by weaker consumer demand and rising borrowing prices. This figure fell short of February’s substantially revised 261K job gains and fell short of predictions of 200K. While employment losses occurred in the financial activities, professional/business industry, and information sectors, the services sector, headed by leisure and hospitality, trade/transportations and utilities, education/health services, and, created 75,000 jobs. While manufacturing shed 30K jobs, the sector that produces products increased 70K jobs, mostly in the mining and construction industries. Large corporations only produced 10K jobs, compared to the 101K jobs created by the smallest-sized businesses, which made up the majority of the job creation. The annual pay increase for those still working dropped to 6.9%, the lowest in over a year, according to Nela Richardson, chief economist at ADP, “Employers are pulling back from a year of strong hiring and pay growth, after a three-month plateau, is inching down.”The US private sector added 145,000 jobs in March, less below the 261,000 positions gained in February and the 200,000 expected, according to ADP’s National Employment Report, which is based on data up to March 23, 2023. The study offers information on employment developments in the US economy, encompassing a range of company types and sizes. According to the statistics, small businesses are adding the most employment, and the manufacturing sector is playing a key role in job development. Though the yearly income rise for those who held onto their employment slowed to 6.9%, it nevertheless showed a decline from the year before. Nela Richardson, the report’s senior economist, contends that following a three-month pause, companies are beginning to temper their hiring and wage increases after a successful year.
Source: Automatic Data Processing, Inc.
US Unemployment Claims Fall to 228K as Labor Market Softens:
In the week ending April 1, there were 228,000 fewer Americans applying for unemployment benefits, a fall of 18,000 from the previous week. However, the numbers for the prior week were drastically revised up to 248K from the 196K first reported, showing a shift in the US Department of Labor’s approach of compensating for seasonality. The significant modifications made since 2018 imply that applications for unemployment benefits were much higher than previously thought. This is consistent with other recent job data that show a downturn in the labor market. A more reliable indicator of jobless claims, the four-week moving average, decreased by 4,250 to 237,750. Notably, initial claims decreased by 17,262 to 206,931 on a seasonally unadjusted basis, with California’s (-6,337) and Michigan’s (-3,333) biggest drops.
The number of Americans requesting unemployment benefits has decreased, according to data from the US Department of Labor, pointing to a favorable trend in the labor market. However, the greater adjustments since 2018 and the strong upward revision in the data from the prior week imply that there may be some weakening in the job market and that the number of applications for unemployment benefits has increased compared to earlier estimates. Unemployment claims are decreasing according to the four-week moving average, which eliminates week-to-week volatility. Despite this encouraging trend, it is important to monitor the labor market given the shifting economic environment and various variables that might have an impact on employment creation.
Source: U.S. Department of Labor
US Unemployment Rate Falls to 3.5% in March 2023:
The unemployment rate in the US dropped to 3.5 percent in March 2023, exceeding forecasts for a hold at 3.6 percent. The rise in employment levels by 577 thousand and the 97 thousand decline in the unemployment rate to 5.839 million were the main drivers of the decline. Additionally, the U-6 unemployment rate, which includes those who want a job but have given up looking and those who work part-time, decreased to 6.7 percent in March. The labor force participation rate also increased slightly to 62.6 percent, the highest level since March 2020, indicating that more people are joining the workforce.
The unemployment rate decreased across most industries, with considerable job growth in professional and business services, leisure and hospitality, and healthcare, according to the US Bureau of Labor Statistics. While the leisure and hospitality industry generated 142,000 jobs, the professional and business services sector added 165,000 jobs. In addition, the healthcare industry created 45,000 new employment. While the unemployment rate for adults dropped to 3.2 percent for men and 3.6 percent for women, it remained high for youths at 10.9 percent. The labor market is strengthening, as seen by the declining unemployment rate and rising labor force participation rate, which may encourage consumer spending and promote the overall economic recovery.
Source: U.S. Bureau of Labor Statistics
US Job Gains Slow in March to 236K, Still Robust:
The US economy created 236K new employment in March 2023, just 3K fewer than anticipated. This figure, which is the lowest since December 2020, shows a slowing trend in hiring as the economy recovers from the epidemic and businesses make cost-cutting decisions as a result of rising borrowing rates and pricing. Despite this, the employment numbers point to a healthy labor market, with several industries continuing to do strongly. These include leisure and hospitality, the public sector, and professional and commercial services. The figure also indicates an upward trend in the labor force participation rate, which increased to 62.6 percent in March, the highest level since same month in 2020.
The Bureau of Labor Statistics reports that employment in leisure and hospitality continues to trend upward, with a gain of 72K jobs in restaurants and bars, showing that Americans are gradually resuming their pre-pandemic activities. In local government education, where there has been a resurgence of in-person instruction, the government has added 47K positions. 39K jobs were added in professional and business services, with increase in the design of computer systems and related services. Hospitals and ambulatory health care services had an increase of 34K employment in the health care sector. During this time, employment in transportation and warehousing expanded by 10,000, which reflects the ongoing demand for online shopping and home delivery services. However, there was a 15K job loss in the retail trade, particularly in the dealers of building materials and garden equipment.
Source: U.S. Bureau of Labor Statistics
Canada (CAD) Highlights:
Canada’s Trade Surplus Narrows to CAD 420 Million in February:
The revised CAD 1.2 billion surplus recorded in January 2023 was drastically reduced to CAD 420 million in February 2023, falling short of the anticipated CAD 1.8 billion positive balance. The major factor for this decline was a 2.4% drop in export value to CAD 65 billion. Due to a steep downturn in gold prices during the year, sales of metal and non-metallic mineral goods fell by 5.4% to CAD 7.04 billion, accounting for a substantial portion of the decline. Additionally, exports of automobiles and their components decreased by 4.4% to CAD 7.9 billion, while this was a little down from the almost four-year high reached in the previous month. As a result of fewer imports of parts for a new LNG terminal project in British Columbia, imports of industrial machinery, equipment, and parts declined significantly by 8.7% to CAD 7.51 billion, slowing the loss of exports by 1.3% to CAD 64.6 billion. Automobile and component imports also decreased by 5.3% to $10.34 billion CAD.
Trading Economics estimates that in February 2023, Canadian exports fell 2.4% month over month. Metal and non-metallic mineral goods, automobiles, and components were the main falling sectors. Imports have dropped from the previous month by 1.3%. The fall in industrial machinery, equipment, and components was the major cause of the drop in imports. On the other hand, there have also been less imports of motor vehicles and their components.
Source: Statistics Canada
Canada’s Unemployment Rate Holds Steady at 5% in March:
Canada’s unemployment rate stayed stable in March 2023 at 5%, which was lower than market predictions and not far from the record-low seen in mid-2022. The majority of jobless people had been out of work for 13 weeks or less, while rates of unemployment among young men and women both significantly decreased. The unemployment rates for women and men in the core age group did not vary considerably and stayed close to record lows. In addition, the Canadian economy created 35,000 jobs in March, with total hours worked growing and average hourly pay increasing by 5.3% compared to the same month last year.
In March, the unemployment rate stayed at 5%, unchanged from February, and somewhat lower than market expectations of 5.1%, according to Statistics Canada. Although the average rate remained stable, several significant variations in particular demographic groups were observed. While female youth saw a reduction of 0.6 percentage points to 8.5%, the jobless rate for young males fell by 0.8 percentage points to 9.9%. But the jobless rates for men and women in the core age group, which have been circling near historic lows, barely moved in March.
The Canadian economy gained 35,000 jobs in March despite the stable unemployment rate, showing modest employment growth. A larger demand for labor may be shown by the 0.4% rise in total hours worked. The average hourly salary increased by 5.3% year over year, showing increasing worker earnings.
Source: Statistics Canada
Canadian Economy Adds 35K Jobs, Beating Forecasts:
The Canadian economy created 35,000 more jobs in March 2023 than the market anticipated (12,000 more jobs). The areas of business and support services, transportation and warehousing, and finance were mostly responsible for the rise. However, employment fell in the areas of personal and repair services, natural resources, and construction. Despite no change in employment for women, there was an increase in employment for men. In contrast to the public sector and self-employed employees, private sector employment increased. Employment rose in Ontario, Alberta, Manitoba, and Prince Edward Island while falling in Saskatchewan. The general stability of the labour market in Canada is encouraging for the expansion and recovery of the economy of the nation.
The total unemployment rate in Canada stayed at 5% in March, according to Statistics Canada. With a 41,000 job growth, the transportation and warehousing sector had a large boost in employment. A total of 31,000 jobs were added to the business, construction, and support services sector, while 19,000 jobs were created to the finance, insurance, real estate, rental, and leasing sector. By contrast, the natural resources sector lost 11,000 jobs, followed by other personal and repair services, which lost 19,000 jobs, and the building sector, which lost 19,000 jobs. While it stayed steady for women, the employment rate increased for males. While the public sector and self-employment saw largely stable growth, the private sector experienced a strong rise of 35,000 jobs. Overall, the labor market in Canada continues to be steady and exhibit encouraging signs of expansion.
Source: Statistics Canada
Canada’s Ivey PMI Surges to 58.2 in March 2023, Beating Expectations:
In March 2023, the Ivey Purchasing Managers Index (PMI) in Canada increased significantly from February’s reading of 51.6 to 58.2, above market estimates of 56.1. This suggests that there were more purchases made in the nation overall throughout the month. While pricing pressures eased and the supplier deliveries index decreased, employment and stocks increased more quickly. These findings imply that demand and corporate activity are rising in the Canadian economy, which may have a favorable effect on future economic development.
The PMI, which gauges the amount of buying activity in Canada based on a poll of purchasing managers in various industries, is a leading economic indicator, according to the Ivey Business School. Investors and decision-makers keep a careful eye on the index since it is seen as a trustworthy indicator of economic activity. The March PMI reading’s gain is a good indication for the Canadian economy since it shows that firms are responding to increased demand by ramping up output and employment. The fall in the supplier delivery index, however, raises the possibility that the economy is still being impacted by supply chain disruptions.
Source: Richard Ivey School of Business
Australia (AUD) Highlights:
Reserve Bank of Australia Pauses Hiking Cycle, Holds Cash Rate at 3.6%:
In accordance with market forecasts, the Reserve Bank of Australia held its cash rate steady at 3.6% during its April meeting, signaling the first break in its tightening cycle since May 2022. The central bank stated that by making this choice, it will be able to evaluate the status of the economy and its prospects in a volatile environment. The bank is prepared to begin tightening should the economy demand it, according to Governor Philip Lowe, even if economic growth has slowed and is anticipated to remain below trend over the next years. Prior to its upcoming meeting before the May budget, the committee is keeping an eye on regional and global statistics. The interest rate on Exchange Settlement balances was similarly maintained at 3.5% by the RBA.
Trading Economics estimates that from 1990 to 2023, the Reserve Bank of Australia’s Cash Rate Target averaged 4.92%. The interest rate on unsecured overnight loans between banks in Australia is known as the cash rate. The Reserve Bank of Australia utilizes it as a tool for monetary policy to affect the economy. The cash rate affects other interest rates in the economy, which affects borrowing and lending costs, which affects how much money families and corporations decide to spend and invest. Therefore, keeping the cash rate steady might have a variety of effects on the economy, including inflation and growth.
Source: Reserve Bank of Australia
Australia’s Trade Surplus Hits AUD 13.87 Billion in February 2023:
The highest trade surplus in eight months was recorded in February 2023, when Australia’s surplus reached AUD 13.87 billion. The gain occurred as exports declined less than imports and outperformed market estimates. Yet while imports fell, the loss in imports is attributable to poor local demand and lower commodity prices, while the decline in exports shows a dip in overseas demand amid rising prices. A promising development for the Australian economy, which is still recuperating from the COVID-19 epidemic, is the increasing trade surplus in the first two months of 2023. Even if the decline in imports is concerning, it is not worrisome because a lot of it is the result of moderated commodity prices. Future changes to the global economy, particularly those in China, Australia’s biggest trading partner, will have an impact on the trade balance.Australia’s trade surplus, according to Trading Economics, has been increasing since mid-2021 and hit a record high of AUD 22.8 billion in November. The trade surplus maintained its rising trend in February despite a minor decline in December and January, demonstrating a significant demand for Australian products and services on the international market. According to the most recent data, Australia’s economic recovery is picking up speed, with a healthy trade surplus fueling economic growth. Yet, the COVID-19 pandemic’s effects on international commerce and the escalating hostilities between Australia and China pose dangers to the nation’s trading prospects.
Source: Reserve Bank of Australia
Switzerland (CHF) Highlights:
Swiss Inflation Rate Drops to 2.9% YoY in March 2023:
The lowest rate since December 2022, Switzerland’s annual inflation rate dropped to 2.9% YoY in March 2023. Reduced price rises in food, non-alcoholic drinks, alcoholic beverages, cigarettes, clothes, footwear, housing, electricity, home maintenance, transportation, and restaurants and hotels were the key factors for the decline. Meanwhile, health and education saw a reduction in inflation, while recreation and culture saw an increase. Consumer prices climbed by 0.2% in March on a monthly basis, which was less than the previous month. The core rate, which excludes volatile goods, fell to 2.2%.Trading Economics predicts that the slower tightening of monetary policy may result from Switzerland’s lower-than-anticipated inflation rate. To tackle growing inflation, the Swiss National Bank (SNB) has been progressively hiking rates since last year. However, in order to boost economic development, the SNB could opt to delay additional rate increases in light of the current downturn. Additionally, decreased inflation would lessen Swiss consumers’ concerns about rising living expenses.
Source: Swiss Federal Statistical Office
Swiss Unemployment Rate Falls to 2.0% in March 2023, Lowest Since November:
The unemployment rate in Switzerland dropped from 2.1% in February 2023 to 2.0% in March 2023, which was the lowest level since November 2022. Additionally, there was a 5.8% decrease in the number of jobless workers, indicating a good trend in the nation’s labor market. Notably, the percentage of young people without jobs fell by 8.1%, reaching an 8-month low of 1.8%. The seasonally adjusted unemployment rate, however, stayed the same at 1.9%. The reduced unemployment rate raises the possibility of a rise in consumer expenditure, which may help the Swiss economy even more.The number of open posts in Switzerland increased by 3.3% in Q4 2022, reaching a total of 69,800 positions, according to the Federal Statistical Office (FSO). The service industry, notably in the fields of healthcare, education, and social work, was responsible for the rise in job openings. Additionally, there were more employment opportunities in the manufacturing and construction industries. The Swiss labor market appears to be in good shape, as seen by the rising number of open positions and declining unemployment rate, which is encouraging for the country’s economic expansion.
Source: State Secretariat for Economic Affairs
New Zealand (NZD) Highlights:
New Zealand’s Central Bank Raises Rates to 5.25% Amid Inflation Concerns:
The official cash rate was increased by the Reserve Bank of New Zealand (RBNZ) by 50 basis points, or bps, to 5.25%, shocking the markets. This was the 11th straight increase since October 2021. The decision was made in reaction to rising consumer inflation that had persisted and employment that had risen over the sustainable upper limit. Despite Q4 2022 economic activity being less than anticipated, demand is outpacing supply, in part because of recent weather disasters. The RBNZ anticipates a modest slowdown in domestic demand as well as a moderating of core inflation and inflation expectations in the near future. The course of future monetary policy will depend on how much this moderation occurs. The board stressed the significance of preserving New Zealand’s financial stability while simultaneously combating inflation.
Trading Economics reports that New Zealand’s inflation rate increased to 4.9% YoY in Q4 2022, above the RBNZ’s target range of 1-3%. The most recent rise aims to reduce increasing inflationary pressures, but it is anticipated to raise borrowing rates for both families and companies. Additionally, there are rising worries about how the RBNZ’s decision would affect the nation’s economic expansion. In Q4 2022, New Zealand’s GDP growth fell to 0.8%, falling short of estimates of 1.0% as the nation continues to struggle with labor shortages and supply chain problems.
Source: State Secretariat for Economic Affairs
The information and opinions in this report are for general information use only. This report is subject to change without prior notice. The individual investing goals and financial status of any particular recipient have not been taken into consideration in the preparation of this report. While the material in this article was gathered from sources that the author considered to be dependable, the author neither guarantees nor accepts responsibility for any direct, indirect, or consequential losses that may arise from the use of any such information or opinions.