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☆ Eurozone slips into recession as revised data shows two quarters of falling output
▼ + stars: | 2023-06-08 | by ( Olesya Dmitracova | ) edition.cnn.com time to read: +3 min

In the first three months of the year, economic output in the eurozone dropped 0.1% compared with the previous quarter, according to revised official data published Thursday. Across the European Union, gross domestic product ticked up 0.1% in the first quarter after falling 0.2% late last year. Commenting on the eurozone data, Andrew Kenningham, chief Europe economist at Capital Economics, said consumption by households had been “hit hard” by high prices and rising interest rates. US economy out in frontBoth the eurozone and the whole of the EU are now lagging the US economy. Earlier official estimates of the eurozone’s economic output pointed to a slight increase in the first quarter.

Persons: Andrew Kenningham, Frederik Ducrozet, Russia’s, Claus Vistesen, ” Organizations: London CNN, European Union, Capital Economics, Pictet Wealth Management, Organisation for Economic Co, Pantheon Macroeconomics, European Central Bank Locations: Europe, Ukraine, United States, downgrades, Germany, Europe’s, Ireland

☆ Euro zone slips into recession after Germany, Ireland revisions
▼ + stars: | 2023-06-08 | by ( Philip Blenkinsop | ) www.reuters.com time to read: +3 min

The revision was principally due to a second estimate from Germany's statistics office showing that the euro zone's largest economy was in recession in early 2023. The euro zone figure for the fourth quarter of 2022 was also cut to -0.1% from a previous reading of zero. Capital Economics said the outlook for the euro zone economy was poor, with a contraction likely again in the second quarter as the impact of higher interest rates fed through. Eurostat said that household spending stripped 0.1 percentage points, public expenditure 0.3 points and inventory changes 0.4 points from quarterly GDP. Gross fixed capital formation added 0.1 points and net trade a further 0.7 points as imports declined.

Persons: Gross, Philip Blenkinsop, Sharon Singleton Organizations: REUTERS, Gross, Eurostat, Reuters, Economics, P Global Market Intelligence, Thomson Locations: Berlin, Germany, Ireland, BRUSSELS, Greece, Lithuania, Malta, Netherlands, Slovakia

☆ Mexico's annual inflation hits lowest since August 2021, beating forecasts
▼ + stars: | 2023-06-08 | by ( ) www.reuters.com time to read: +2 min

MEXICO CITY, June 8 (Reuters) - Mexico's annual inflation rate slowed in May for a fourth consecutive month to 5.84%, data from statistics agency INEGI showed on Thursday, beating forecasts and continuing a downward trend spurred by a long cycle of rate hikes. Headline inflation came in below a forecast of 5.90% and is now at its lowest since August 2021. Jason Tuvey, Deputy Chief Emerging Markets Economist at Capital Economics said that inflation forecasts remained overly optimistic. Banxico does not expect inflation to reach its target rate of 3%, plus or minus a percentage point, until late 2024. Annual core inflation, considered a better gauge of price trends, was 7.39%, as forecast.

Persons: Jason Tuvey, Isabel Woodford, Jason Neely, Christina Fincher Organizations: MEXICO CITY, Capital Economics, Thomson Locations: MEXICO, Mexican

☆ Euro zone enters recession after Germany, Ireland growth revision
▼ + stars: | 2023-06-08 | by ( Silvia Amaro | ) www.cnbc.com time to read: +2 min

The euro zone entered a recession in the first quarter of this year, and economists are not optimistic for the coming months. In a first reading, the agency had said the euro zone grew by 0.1% over the first three months of the year. Prior to its weak performance over January-March, the euro zone also contracted by 0.1% in the last quarter of 2022. "News that GDP contracted in the first quarter after all means that the euro zone has already fallen into a technical recession. Euro zone bond yields continued to trade largely higher Thursday following the data announcement, as several market players expect further monetary tightening.

Persons: Andrew Kenningham, Claus Vistesen Organizations: Capital Economics, Macroeconomics, European Central Bank, ECB Locations: Germany, Europe, Ireland, Netherlands, Greece

☆ UK house prices post first annual drop since 2012, says Halifax
▼ + stars: | 2023-06-07 | by ( Suban Abdulla | ) www.reuters.com time to read: +2 min

LONDON, June 7 (Reuters) - British house prices dropped on an annual basis in May for the first time in 11 years, and pressure on prospective buyers from higher mortgage rates could deepen the downturn, mortgage lender Halifax said on Wednesday. Kim Kinnaird, director of mortgages at Halifax, said demand was weakening and higher interest rates were likely to increase pressure on house prices. Halifax, part of Lloyds Banking Group (LLOY.L), on Tuesday said it would raise interest rates for its fixed home loans from Wednesday. The stronger-than-expected inflation data raised markets' bets interest rates will peak at 5.5% later this year. Nationwide, another lender, last week reported a steeper 0.5% month-on-month drop in house prices in April and a 3.4% annual decline - the biggest drop since 2009.

Persons: Kim Kinnaird, Liz Truss's, Kinnaird, Myron Jobson, Suban Abdulla, Andy Bruce, Paul Sandle, Barbara Lewis Organizations: Halifax, Lloyds Banking Group, Interactive Investor, Capital Economics, Nationwide, Thomson Locations: Halifax

☆ UK predicted to have the highest inflation rate out of all advanced economies this year
▼ + stars: | 2023-06-07 | by ( Silvia Amaro | ) www.cnbc.com time to read: +2 min

The OECD recently predicted that the UK will experience the highest inflation among all advanced economies this year. The U.K. headline inflation is "projected to slow on the back of declining energy prices and to come down close to target by the end of 2024," the OECD noted. "Core inflation is set to be more persistent due to strong services inflation, only receding to 3.2% in 2024." The U.K. is set to report a headline inflation of 6.9% this year, above the OECD average of 6.6% for 2023. Sanctions-struck Russia is forecast to have a headline inflation of just under 5.4% in 2023.

Persons: Andrew Bailey, Governor Bailey, BoE, Paul Dales Organizations: OECD, LONDON, Organization for Economic Cooperation, Bank of England, Capital Economics Locations: Sheffield, Argentina, Turkey, Russia, Paris, Paul

☆ German industrial orders fall unexpectedly in April
▼ + stars: | 2023-06-06 | by ( ) www.reuters.com time to read: +1 min

June 6 (Reuters) - German industrial orders fell unexpectedly in April, dragged down by large-scale orders, data from the federal statistics office showed on Tuesday. Industrial orders fell by 0.4% on the previous month on a seasonally and calendar adjusted basis. Excluding large-scale orders, there was an increase of 1.4% in April compared to the previous month. Year-on-year, industrial orders were down 9.9% in April. Domestic orders rose by 1.6%, while foreign orders sank by 1.8% on the previous month, the statistics office data showed.

Persons: Holger Schmieding, Schmieding, Franzisca Palmas, Maria Martinez, Anastasiia, Rachel More Organizations: Reuters, Companies, Capital Economics, Thomson Locations: Franzisca, Europe, Berlin, Gdansk

☆ Analysis: Strong economy puts Bank of Canada's 4-month rate hike pause in doubt
▼ + stars: | 2023-06-05 | by ( Steve Scherer | ) www.reuters.com time to read: +4 min

Inflation, which peaked at 8.1% last year, accelerated for the first time in 10 months in April to 4.4%, more than double the Bank of Canada's 2% target. The recent recovery in Canada's housing market is also putting pressure on prices, analysts say. "The Bank of Canada's penchant for surprising traders means that nothing can be ruled out," said Royce Mendes, head of macro strategy at Desjardins Group. Mendes said there could be more than one rate hike in the cards, and Canadians should "brace themselves for a further tightening in financial conditions this summer". "The latest round of data adds weight to our view that the Bank will need to conduct an insurance rate hike at either of its next two meetings," said Jay Zhao-Murray, FX analyst at Monex Canada.

Persons: Stephen Brown, Royce Mendes, Mendes, Macklem, Jay Zhao, Murray, Steve Scherer, Fergal Smith, Denny Thomas, Daniel Wallis Organizations: OTTAWA, Bank of Canada, BoC, Bank of Canada's, North, Capital Economics, Reuters, Federal Reserve, Desjardins Group, Monex Canada, Thomson Locations: North America, United States, States

☆ Turkey inflation dips to 39.6% on relief from free gas
▼ + stars: | 2023-06-05 | by ( ) www.reuters.com time to read: +3 min

ISTANBUL, June 5 (Reuters) - Turkish annual inflation fell to 39.59% in May, official data showed on Monday, broadly in line with expectations, largely due to the government offsetting price rises in other goods by providing natural gas free of charge. The government had pledged ahead of last month's elections that it would provide free gas in May, and a monthly free 25 cubic metres until May 2024. The poll had forecast that annual consumer price inflation (CPI) (TRCPIY=ECI) would be 39.2%, and was expected to end the year at 45%. Clothing and shoe prices recorded the largest monthly increase with 9.85%, followed by restaurant and hotel prices with 7.10%. The weight of natural gas in the inflation basket is 2.9%.

Persons: Tayyip Erdogan, Erdogan, Mehmet Simsek, Liam Peach, Peach, Cevdet Yilmaz, Canan Sevgili, Daren Butler, Ali Kucukgocmen, Jonathan Spicer, William Maclean Organizations: Turkish Statistical Institute, Treasury, Finance, Capital Economics, Thomson Locations: ISTANBUL

☆ Yes, you can have a red-hot jobs market and a recession
▼ + stars: | 2023-06-05 | by ( Jeff Cox | ) www.cnbc.com time to read: +6 min

The U.S. jobs market is still sizzling and the economy is heading for a recession: Both things can be true. May's nonfarm payrolls growth again stunned Wall Street, with the count climbing by 339,000, well ahead of Wall Street estimates that have consistently undershot the report since January 2022. However, there's an old adage on the Street that when it comes to recessions, the jobs market is always the last to know. Central bank policymakers specifically have targeted a slowdown in the labor market in their quest to bring down inflation. The weak services reading comes with an ISM manufacturing reading — most recently at 46.9 — in contraction for seven straight months.

Persons: Ian Shepherdson, Shepherdson, Kumar, Andrew Hunter, Hunter, DataTrek, Nicholas Colas Organizations: Federal, Pantheon, Fed, Sri, Kumar, Services, Capital Economics, Research, Atlanta Locations: payrolls

☆ British home prices to slip but won't come crashing down, Reuters poll shows
▼ + stars: | 2023-06-02 | by ( Jonathan Cable | ) www.reuters.com time to read: +4 min

[1/3] Partly finished houses are seen on a new housing development under construction in Liverpool, Britain June 2, 2023. Yes, prices will fall this year but by single digits," said Tony Williams at consultancy Building Value. From peak to trough home prices will fall 7.5%, the median in the poll showed. "Persistent core inflation and wage pressures will prevent the Bank of England from cutting interest rates until 2024, which means mortgage rates won't fall any further until next year," said Andrew Wishart at Capital Economics. (For other stories from the Reuters quarterly housing market polls:)Reporting by Jonathan Cable; polling by Mumal Rathore and Anitta Sunil; Editing by Kim CoghillOur Standards: The Thomson Reuters Trust Principles.

Persons: Phil Noble, Tony Williams, Andrew Wishart, BoE, Michael McGill, Barratt, Russell Quirk, Jonathan Cable, Mumal Rathore, Anitta Sunil, Kim Coghill Organizations: REUTERS, Bank of England, Capital Economics, Nationwide, Thomson Locations: Liverpool, Britain, Britain's, London

☆ For Turkey, Erdogan Victory Brings More Risky Economic Policy
▼ + stars: | 2023-06-02 | by ( Patricia Cohen | ) www.nytimes.com time to read: +1 min

Critics of the president’s economic approach were somewhat heartened by reports that Mr. Erdogan is expected this weekend to appoint Mehmet Simsek, a former finance minister and deputy prime minister, to the cabinet. Mr. Simsek is well thought of in financial circles and has previously supported a tighter monetary policy. Mr. Barkey argues that Mr. Erdogan will have no choice but to make a U-turn on policy by winter, when energy import costs rise and some debt payments are due. Others are more skeptical that Mr. Erdogan will back down from his insistence that high interest rates fuel inflation. To deal with the large external deficit and depleted central bank reserves, Mr. Erdogan has been relying on allies like Russia, Qatar and Saudi Arabia to help bolster its reserves by depositing dollars with the central bank or extending payment deadlines and discounts for imported goods like natural gas.

Persons: Mr, Erdogan, Mehmet Simsek, Simsek, ”, Henri Barkey, Simsek’s, Barkey, Kadri Tastan, didn’t, “ Organizations: Lehigh University ., German Marshall Fund, Capital Economics Locations: Turkey, Brussels, Russia, Qatar, Saudi Arabia

☆ Asia's factories struggle for momentum amid patchy recovery
▼ + stars: | 2023-06-01 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

"The PMI surveys suggest that China's economic recovery was still ongoing in May, albeit at a slower pace. China's Caixin/S&P Global manufacturing PMI rose to 50.9 in May from 49.5 in April, above the 50-point index mark that separates growth from contraction. Vietnam, Malaysia and Taiwan also saw factory activity shrink in May, while that of the Philippines expanded, the surveys showed. Asia's economy is heavily reliant on the strength of China's recovery, which has been uneven with services spending outperforming activity in export-oriented sectors. In forecasts released in May, the International Monetary Fund said it expects Asia's economy to expand 4.6% this year after a 3.8% gain in 2022, contributing around 70% of global growth.

Persons: Julian Evans, Pritchard, Wang Zhe, Leika Kihara, Sam Holmes Organizations: PMI, Capital Economics, P Global, Caixin Insight, Jibun, International Monetary Fund, Thomson Locations: South Korea, Vietnam, Taiwan, TOKYO, China, Japan, Asia, South, Malaysia, Philippines

☆ Measuring inflation can be tricky and quirky. Here are 3 examples
▼ + stars: | 2023-06-01 | by ( Greg Iacurci | ) www.cnbc.com time to read: +5 min

HousingRichard Newstead | Moment | Getty ImagesHousing is perhaps the most consequential category in the consumer price index, a key inflation barometer. But Covid-19 warped that dynamic: Housing costs shot up but have slowed and even started to fall in some areas, economists said. Overall inflation is expected to slow sharply during the second half of the year as the CPI incorporates the housing price cooldown, economists said. The government doesn't calculate health insurance inflation by measuring consumers' direct costs, such as monthly premiums. Health insurance inflation readings may flip positive in fall 2023 and persist into 2024 due to this dynamic, Zandi said.

Persons: Housing Richard Newstead, Zandi, Price, Mark Zandi, Andrew Hunter, Hunter, There's, Jordi Mora Igual Organizations: Housing, Capital Economics, U.S . Bureau of Labor Statistics, BLS, CPI, Health, Images, Kaiser Family Foundation, Consumers

☆ UK house prices fall by most since 2009, higher rates to bite-Nationwide
▼ + stars: | 2023-06-01 | by ( ) www.reuters.com time to read: +2 min

LONDON, June 1 (Reuters) - British house prices fell by the most since 2009 in the 12 months to May and the country's housing market faces further headwinds after a recent jump in borrowing costs, mortgage lender Nationwide said on Thursday. Compared with May last year, the average house price was down 3.4% after a 2.7% annual fall in April, Nationwide said. House prices edged down by 0.1% in May from April after a monthly 0.4% rise in April, Nationwide said. Martin Beck, an economist with the EY Item Club, a forecasting group, said the 4% fall in house prices from last August's peak was modest compared with the 7% rise in house prices over the past two years. Analysts at Capital Economics said prices would fall another 8% while Pantheon Macroeconomics said they would drop 4%.

Persons: Liz Truss's, Headwinds, Robert Gardner, Gardner, Martin Beck, BoE, Beck, William Schomberg, Muvija M, Paul Sandle, Christina Fincher Organizations: Nationwide, Bank of, Capital Economics, Thomson Locations: Bank, Bank of England

☆ Inflation in Europe drops to lowest level since Russia invaded Ukraine
▼ + stars: | 2023-06-01 | by ( Hanna Ziady | ) edition.cnn.com time to read: +2 min

London CNN —Inflation in Europe has fallen to its slowest pace since Russia invaded Ukraine, bolstering the case for the region’s central bank to bring interest rate hikes to an end soon. That’s the lowest rate of inflation since February 2022, when Moscow launched a full-scale invasion of its neighbor, sending global energy prices soaring. The pace of food price rises eased for the second month running in May, while energy prices actually fell. Inflation has fallen sharply in Germany, France, Italy and Spain, national data published Wednesday showed. Separate data published Tuesday showed lending by banks in the euro area stagnated further in April, with loans to households barely growing at all.

Persons: Price, Christine Lagarde, ” Lagarde, ” Franziska Palmas, ”, Bert Colijn Organizations: London CNN, Russia, European Central Bank, ECB, US Federal Reserve, Bank of, Capital Economics, ING Locations: Europe, Ukraine, Moscow, Germany, France, Italy, Spain, Bank of England, Palmas

☆ Risks the global economy still faces as threat of US debt default recedes
▼ + stars: | 2023-06-01 | by ( Hanna Ziady | ) edition.cnn.com time to read: +7 min

London CNN —With the threat of an unprecedented US debt crisis receding fast, the global economy looks to have dodged a huge shock. While an immediate crisis has likely been avoided, the litany of problems that had been temporarily overshadowed by the specter of a US default — among them, high inflation, rising interest rates and sluggish growth — haven’t gone away. Bloomberg/Getty ImagesInflation still too highAgainst that backdrop, inflation has eased in Europe’s second biggest economy, mimicking falls in Germany, Spain and Italy. But it could still arise from two longstanding threats: the Ukraine war and the climate crisis, both of which pose risks to global supply chains and food prices. The war helped drive international food prices to an all-time high last year.

Persons: specter, haven’t, ”, Carsten Brzeski, “, Charlotte de, Neil Shearing, Vladimir Putin, Michael Bociurkiw, Bociurkiw, Marcelo del Pozo Organizations: London CNN —, ING, Charlotte de Montpellier, Bloomberg, Getty, Data, United, Deutsche Bank, Capital Economics, Atlantic Council, Isla Mayor, ” Gro Intelligence Locations: United States, China, Germany, France, Beijing, Europe’s, Spain, Italy, United Kingdom, Ukraine, Moscow, Russian, Russia, Isla, Europe

Average house prices as measured by the S&P CoreLogic Case-Shiller composite index of 20 metropolitan areas were forecast to stagnate next year. "Looking ahead, we think there is scope for prices to fall a little further. "Given supply is likely to stay tight, there is a risk house prices may not fall as much as we previously expected." The 30-year fixed mortgage rate, currently around 6.7%, was expected to average 6.2% in 2023. Those high mortgage rates are restricting housing supply, which puts upward pressure on prices, as well as demand.

Persons: Sam Hall, haven't, Sal Guatieri, Indradip Ghosh, Prerana Bhat, Aditi Verma, Maneesh Kumar, Jonathan Cable, Ross Finley, Sharon Singleton Organizations: stagnating, Reuters, U.S . Federal Reserve, Capital Economics, BMO Capital Markets, Thomson Locations: BENGALURU

☆ China's disappointing rebound could bring in more stimulus, economists say
▼ + stars: | 2023-05-30 | by ( Elliot Smith | ) www.cnbc.com time to read: +5 min

Photographer: Qilai Shen/Bloomberg via Getty Images Qilai Shen | Bloomberg | Getty ImagesChina's much-vaunted economic rebound after its emergence from strict zero-Covid lockdown measures has yet to fully materialize, prompting some economists to speculate that further fiscal stimulus or monetary policy easing could be coming down the pipeline. Data from China's Bureau of Statistics shows that 6 million of the 96 million 16 to 24-year-olds in the urban labor force are currently unemployed. watch nowIn a research note Monday, Capital Economics assessed that, despite losing some momentum, China's economic recovery was still progressing at the start of the second quarter, with scope for further service sector-led improvement. But we do not expect policy rate cut or major fiscal stimulus, barring a precipitous fall in exports in the coming months." Any consensus among economists as to the trajectory of fiscal and monetary policy seems to be unraveling in light of the tenuous recovery.

☆ Britain is getting so desperate to tame inflation it’s talking about food price caps
▼ + stars: | 2023-05-30 | by ( Hanna Ziady | ) edition.cnn.com time to read: +6 min

Food inflation dipped slightly to 15.4% in May, but that’s still the second-highest rate on record. But chocolate and coffee prices are rising as global commodity prices soar, British Retail Consortium CEO Helen Dickinson said. Price controls anyone? “The current food price shock does not warrant such an intervention,” he added. Brexit is responsible for about a third of UK food price inflation since 2019, according to researchers at the London School of Economics.

Kumar, like others in his position, knows all too well the frustrations that can build when work is scarce. “Since childhood, we’ve been facing this competition,” said Sarang Agrawal, 28, who is studying for the Indian civil service entrance test. There’s competition everywhere.”Sarang Agrawal (center) is studying in the hope of becoming a civil servant. Vijay Bedi/CNNNo social life, no love life … and no plan BLike Kumar and Kumari, Agrawal knows all about competition. He is among the more than 1 million people who apply each year for a position in the Indian civil service.

☆ German economy enters recession as first-quarter GDP data is revised lower
▼ + stars: | 2023-05-25 | by ( Silvia Amaro | ) www.cnbc.com time to read: +2 min

The German economy entered a technical recession in the first quarter of this year, as households tightened spending. Data from the German statistics office on Thursday showed a downward revision to GDP (gross domestic product) from zero to -0.3% for the first three months of the year. The European Central Bank is expected to raise rates again at its next meeting on June 15. German Central Bank Governor Joachim Nagel said earlier this week that the ECB has "several" more rate increases ahead. He is one of the most hawkish members of the central bank.

U.S. Treasury Secretary Janet Yellen previously warned lawmakers that a default in early June is "highly likely." Prices rose 1.2% month on month, above a forecast of 0.8%. "April 2022 saw energy prices increase by 47.5%. Thanks to the government's energy price guarantee, this energy surge has now dropped out of the year-on-year equation, leading the comparative inflation rate to naturally fall." The International Monetary Fund on Tuesday joined the Bank of England in saying that it no longer expects a U.K. recession this year.

Persons: Janet Yellen, Kevin McCarthy, Joe Biden, Jeremy Batstone, Carr Organizations: U.S, Treasury, Raymond James Investment Services, of England, Capital Economics, Monetary Fund, Tuesday, Bank of England Locations: European

☆ Gold slips as dollar advances with US debt talks dragging on
▼ + stars: | 2023-05-24 | by ( ) www.cnbc.com time to read: +2 min

Gold slipped as the dollar firmed, cutting some safe- haven flows into bullion from the looming risk of a U.S. debt default as talks entered a critical stretch. "Overwhelmingly, the debt ceiling headlines are at play.... Gold gained in the previous session "despite headwinds from a rising broad dollar, which reveals notable demand behind the scenes." Wall Street's main indexes opened lower as the debt ceiling impasse kept investors on edge. If regional U.S. banking troubles were to subside and agreement reached over the debt ceiling, gold could fall further, said Edward Gardner, commodities economist at Capital Economics.

Persons: Gold, Joe Biden, Kevin McCarthy, Daniel Ghali, TD Securities . Gold, Edward Gardner, Bullion Organizations: Democratic, TD Securities ., Capital Economics Locations: Moscow, U.S

☆ UK inflation surprises for all the wrong reasons
▼ + stars: | 2023-05-24 | by ( Hanna Ziady | ) edition.cnn.com time to read: +3 min

Britain’s stubbornly high inflation is a major drag on its economy because it increases the cost of everyday goods and services, dampening consumption. At the same time, interest rate hikes to combat inflation make loans and mortgages more expensive, which further weighs on spending by businesses and consumers. “The indirect impact of energy prices on business costs means lower gas and electricity prices should eventually feed into lower core inflation. But strong wage growth is likely to keep services inflation high throughout this year,” he added. But it cautioned that high inflation is still a considerable risk to the UK economy.

Persons: Grant Fitzner, Britain’s, ” Paul Dales, Martin Beck, ” Organizations: London CNN —, National Statistics, Bank of England, International Monetary Fund, Bank, Capital Economics, IMF, Bank of England’s Locations: United Kingdom

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