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Around 36% of businesses polled view geopolitical tensions as top risks currently — such as those related to issues over Taiwan, South Korea, and Russia-NATO. The latest third quarter 2023 Global Risk Survey covered 127 businesses from July 6-27 this year. Risks aheadGeopolitical risks continue to factor prominently for businesses as a major concern for the next five years. "As reported last quarter, more than three-fifths of respondents view geopolitical risks as a very significant risk to the global economy over the medium term," said Thompson. "An intensification of geopolitical tensions could potentially trigger significant deglobalization of trade and the financial system," he added.
Persons: Fred DUFOUR, FRED DUFOUR, Fred Dufour, Jamie Thompson, Fitch, Biden, Vladimir Putin, Thompson, Kevin O'Leary Organizations: Getty, Afp, Oxford Economics, Fitch downgrades, UBS, NATO, U.S, Reuters, Atlantic Treaty Organization, . Federal, Silicon Valley Bank, Signature Bank Locations: Beijing, Taiwan, South Korea, Russia, Washington, U.S, China, it's, Ukraine, Republic, Silicon
Euro zone inflation falls further in comforting sign for ECB
  + stars: | 2023-07-31 | by ( ) www.reuters.com   time to read: +2 min
FRANKFURT, July 31 (Reuters) - Euro zone inflation fell further in July and most measures of underlying price growth also eased, in a largely comforting sign for the European Central Bank (ECB) as it considers ending its severe run of interest rate hikes. Consumer prices grew by 5.3% this month versus 5.5% in June, extending a downtrend that started in the autumn. "Services inflation is the area where monetary policy should have the greatest influence because it reflects domestic demand," Dirk Schumacher, an economist at Natixis said. Hawks could also point at hard data about growth, which showed the euro zone returned to growth in the second quarter of 2023 despite negative sentiment and activity polls. The weak survey data has continued to come in in recent days, fuelling talk of a recession in the euro area that the ECB is still hoping to avoid.
Persons: Frederik Ducrozet, Christine Lagarde, Dirk Schumacher, Natixis, Francesco Canepa, Peter Graff Organizations: European Central Bank, Pictet Wealth Management, ECB, Oxford, Thomson Locations: FRANKFURT
Gross domestic product in the eurozone grew 0.3 percent in the second quarter of 2023, a stronger result than predicted by economists. Italy, Austria and Latvia all saw output fall in the second quarter. Inflation across the eurozone dipped to an annual rate of 5.3 percent in July, down from 5.5 percent the previous month. “On the whole, the eurozone economy recorded another underwhelming quarter,” said Ricardo Amaro, a senior economist at Oxford Economics. He noted that “the second half of the year is likely to be as underwhelming, if not more than the first half, with the eurozone economy risking stagnation or worse.”
Persons: , Fritzi, KfW, Christine Lagarde, What’s, Lagarde, , Ricardo Amaro Organizations: Gross, European Central Bank, Oxford Economics Locations: Germany, Europe’s, Ukraine, Germany’s, Italy, Austria, Latvia, Spain, France, Europe, Russia
Expectations for peak BoE rates reached 6.5% on July 11 after data showed record wage growth. But they fell back after a bigger-than-expected decline in consumer price inflation. Still, that inflation rate is nearly four times the BoE's 2% target and double the rate in the United States. Following the end of Silvana Tenreyro's tenure on the BoE's Monetary Policy Committee, fellow external member Swati Dhingra is likely to be alone in making the case that producer price inflation - rather than wage growth - is a better guide to future consumer price inflation trends. Annual producer price inflation fell to 0.1% in June, its lowest since December 2020, down from a high of nearly 20% last July, which it hit just a few months before CPI peaked at 11.1%.
Persons: BoE, Andrew Goodwin, BoE Governor Andrew Bailey, Dave Ramsden, Ramsden, Peter Schaffrik, Cathal Kennedy, Silvana Tenreyro's, Swati Dhingra, Megan Greene, Bailey, Huw Pill, David Milliken, Kirsten Donovan Organizations: Bank of England, U.S . Federal Reserve, European Central Bank, Oxford Economics, Reuters, MPC, HSBC, RBC, Committee, Kroll Institute, Tenreyro, Monetary, Thomson Locations: Britain, United States, Germany
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailThe Bank of Japan is preparing for both upside and downside risks, economist saysShigeto Nagai, head of Japan economics at Oxford Economics, discusses the central bank's decision to make its yield curve control policy more flexible.
Persons: Shigeto Nagai Organizations: of Japan, Oxford Economics Locations: Japan
Kazuo Ueda, governor of the Bank of Japan (BOJ). Bloomberg | Bloomberg | Getty ImagesThe Bank of Japan announced Friday "greater flexibility" in its monetary policy — surprising global financial markets. The central bank loosened its yield curve control — or YCC — in an unexpected move with wide-ranging ramifications. When asked if the central bank had shifted from dovish to neutral, he said: "That's not the case. MUFG said that Friday's "flexibility" tweak shows the central bank is not yet ready to end this policy measure.
Persons: Kazuo Ueda, Shigeto Nagai, CNBC's, , Duncan Wrigley, MUFG, Governor Ueda, Michael Metcalfe, Metcalfe Organizations: Bank of Japan, Bloomberg, Getty, of Japan, Nasdaq, Oxford Economics, disinflation, Capital Economics, U.S, U.S . Federal, Bank, Pantheon, Street Global Locations: Europe, Japan, U.S ., China, dovish
Europe economy: The recession may already be over
  + stars: | 2023-07-28 | by ( Mark Thompson | ) edition.cnn.com   time to read: +3 min
Spain reported GDP growth of 0.4%, just a shade weaker than in the first quarter. Second-quarter GDP figures for the euro area as a whole will be published on Monday. “We expect a modest expansion in eurozone GDP after two weak quarters,” Oxford Economics said in a research note on Friday. Only 7% of forecasters expect the euro area to suffer another recession, or two consecutive quarters of contraction, between now and the first quarter of 2024. Separately, survey data released Monday showed that business activity in the euro area contracted at the fastest pace in eight months in July.
Persons: , Christine Lagarde, ” Lagarde Organizations: CNN, , French, Oxford, European Central Bank, headwinds, , ECB Locations: France, Spain, Germany, China
School closures during the pandemic could erase over $500 billion of potential economic growth from a handful of Asian countries, according to Oxford Economics. From 2021 to 2035, each of these economies may lose 0.3% and 0.8% of potential GDP per year on average, according to a report by the economic advisory firm. As a result of pandemic-induced school closures, those countries could lose a collective GDP of approximately $511 billion. Because of that, the Philippines could see the highest loss in potential GDP and investments between 2021 and 2035, according to the global research firm. Thailand is expected to see the least loss in potential GDP and investments during the same period.
Organizations: Longos Elementary School, Oxford Economics, Schools Locations: Alaminos, Philippines, India, Indonesia, Malaysia, Thailand
July 25 (Reuters) - The U.S. semiconductor industry faces a shortfall of roughly 67,000 workers by 2030, according to an industry association study published on Tuesday. The chip industry's workforce is projected to grow to 460,000 by the end of the decade, up from roughly 345,000 this year. The law also created a 25% investment tax credit for building new chip factories, or fabs, that is worth $24 billion. Roughly half of the future chip industry jobs will be engineers. The shortage of skilled chip workers is part of a larger shortfall of science, technology, engineering and math graduates in the U.S., according to the report.
Persons: John Neuffer, Max A, Christian Schmollinger Organizations: Semiconductor Industry Association, SIA, Oxford Economics, Commerce Department, Intel Corp, Taiwan Semiconductor Manufacturing Co, Samsung Electronics Co, Thomson Locations: U.S, KS, San Francisco
Minneapolis CNN —High interest rates aren’t souring Americans’ moods: A key measurement of consumer confidence just shot up to a level not seen since July 2021. The Conference Board’s monthly Consumer Confidence Index hit 117 in July, rising from 110.1 the month before, according to new data released Tuesday. The Conference Board’s confidence index and the University of Michigan’s twice-a-month consumer sentiment index are two leading gauges of consumers’ attitudes toward the current and future strength of the economy. Consumer spending, which is a key driver of US economic activity, has eased somewhat in recent months but remains resilient. The Commerce Department on Friday will release the latest data on consumer spending alongside a critical inflation gauge for the Fed.
Persons: , Dana Peterson, , Nathan Howard, ” Ryan Sweet, Chris Rupkey, FwdBonds, Barbie Organizations: Minneapolis CNN —, Conference Board, Washington , D.C, Bloomberg, Getty, University of Michigan’s, Oxford Economics, ‘ Times, Commerce Department, Fed Locations: Minneapolis, Georgetown, Washington ,, Michigan, America
The survey also indicated the European Central Bank's sustained campaign of interest rate rises is starting to take its toll on consumers and denting the services sector. In our baseline case we expect subdued growth for the second half of the year, but today's data suggest the risk of a small contraction in euro zone GDP in Q3 is increasing." In France a downturn extended into July as both the services and manufacturing sectors did worse than expected. A PRICE TO PAYThe euro zone services PMI fell to 51.1 from 52.0, its lowest since January and shy of the Reuters poll forecast for 51.5. An index measuring output, which feeds into the composite PMI, fell to its lowest in over three years.
Persons: Paolo Grignani, Jack Allen, Reynolds, Jonathan Cable, John Stonestreet, Toby Chopra Organizations: P Global, June's, Oxford Economics, PMI, Reuters, Capital Economics, ECB, Thomson Locations: Germany, France, Europe's, Britain
US personal savings have collapsed by $5.5 trillion since April 2020, spelling trouble for the economy. Historically high inflation has been the key reason for the decline in American consumers' cash reserves. With the return of student loan bills, savings and spending levels could worsen. Billionaire investor Bill Gross recently weighed in on falling consumer savings levels, warning that Americans could run out of their pandemic savings later this year, paving the way for a recession. Also adding pressure on the US economy is the return of student loan bills, which could cut both consumer saving and spending levels.
Persons: Barchart.com, Bill Gross Organizations: Service, Federal Reserve, Oxford Economics Locations: Wall, Silicon
Headline inflation rates have declined, but policymakers are closely watching other measures of price pressure that signal how deeply inflation has become embedded in the British economy. In June, some of these price pressures eased: Inflation in the services sector slowed slightly to 7.2 percent, and core inflation declined for the first time since January. In January, the government pledged to halve the inflation rate by the end of this year, which would mean a fall to 5.2 percent. This partially explains Britain’s relatively high inflation rate — which is higher than in Western Europe and double the rate in the United States — but there are other reasons that inflationary pressures in Britain are strong. The Bank of England raised its interest rate a 13th time last month, to 5 percent, from 0.1 percent in late 2021.
Persons: Price, ” Andrew Goodwin, Mr, Goodwin, ” Andrew Bailey, Bailey Organizations: Oxford Economics, Bank of England, Employers Locations: British, Europe, Britain, Western Europe, United States
Summary Single-family housing starts drop 7.0% in JuneSingle-family building permits increase 2.2%Multi-family starts fall 11.6%; permits drop 5.6%WASHINGTON, July 19 (Reuters) - U.S. single-family homebuilding fell in June, but permits for future construction rose to a 12-month high as a severe shortage of previously owned houses for sale supports new construction. The decline in housing starts reported by the Commerce Department on Wednesday partially retraced an abnormally large 18.7% surge in May, which had pushed groundbreaking on single-family housing projects to an 11-month high. Single-family housing starts, which account for the bulk of homebuilding, dropped 7.0% to a seasonally adjusted annual rate of 935,000 units last month. In June, single-family homebuilding fell in the Northeast, Midwest as well as the densely populated South, but jumped 4.6% in the West. Housing starts and building permitsHOUSING STABILIZING"Today's report continues to suggest stabilization," said Murat Tasci, an economist at JPMorgan in New York.
Persons: homebuilding, Mark Palim, Fannie, Freddie Mac, Murat Tasci, Nancy Vanden, Lucia Mutikani, Chizu Nomiyama, Andrea Ricci Organizations: Commerce Department, Builders, Reuters, Federal, National Association of Home Builders, Treasury, Housing, JPMorgan, Oxford Economics, Thomson Locations: WASHINGTON, Fannie Mae, Washington, homebuilding, Northeast, Midwest, Wells Fargo, New York, West, Nancy Vanden Houten, U.S
Summary Single-family housing starts drop 7.0% in JuneSingle-family building permits increase 2.2%Multi-family starts fall 11.6%; permits drop 5.6%WASHINGTON, July 19 (Reuters) - U.S. single-family homebuilding fell in June, but permits for future construction rose to a 12-month high as a severe shortage of previously owned houses for sale supports new construction. The decline in housing starts reported by the Commerce Department on Wednesday partially retraced an abnormally large 18.7% surge in May, which had pushed groundbreaking on single-family housing projects to an 11-month high. Single-family housing starts, which account for the bulk of homebuilding, dropped 7.0% to a seasonally adjusted annual rate of 935,000 units last month. In June, single-family homebuilding fell in the Northeast, Midwest as well as the densely populated South, but jumped 4.6% in the West. Housing starts and building permitsHOUSING STABILIZING"Today's report continues to suggest stabilization," said Murat Tasci, an economist at JPMorgan in New York.
Persons: homebuilding, Mark Palim, Fannie, Freddie Mac, Murat Tasci, Nancy Vanden, Lucia Mutikani, Chizu Nomiyama, Andrea Ricci Organizations: Commerce Department, Builders, Reuters, Federal, National Association of Home Builders, Treasury, Housing, JPMorgan, Oxford Economics, Thomson Locations: WASHINGTON, Fannie Mae, Washington, homebuilding, Northeast, Midwest, Wells Fargo, New York, West, Nancy Vanden Houten, U.S
The launch of a luxury cruise ship was delayed by faulty fire panels, the Financial Times reported. The launch of a highly anticipated luxury cruise ship has been delayed by safety concerns, the Financial Times reported on Friday. According to data compiled by Cruise Market Watch, about 320 cruise ships are operating globally. That would indicate about 15% of the world's operating cruise ships could be at risk of disruption if the panels needed to be replaced. According to economic forecaster Oxford Economics, cruise operating capacity is expected to exceed its 2019 level by 16% in 2024.
Persons: Fincantieri, Paroc, didn't Organizations: Financial Times, Caribbean International, Cruise Market Watch, Cruise Line International Agency, Oxford, MSC Locations: Finnish, Italian
Slower, still strong US job growth expected in June
  + stars: | 2023-07-07 | by ( Lucia Mutikani | ) www.reuters.com   time to read: +5 min
The economy needs to create 70,000-100,000 jobs per month to keep up with growth in the working-age population. A Conference Board survey last month showed consumers' perceptions of the labor market more upbeat in June relative to May. But first-time applications for unemployment benefits jumped to a 20-month high during the week that the government surveyed businesses for the nonfarm payrolls count. "They are going to opt to cut hours worked, that is something we need to pay very close attention to, rather than the net gain in nonfarm payrolls." The slowdown in wage growth is being driven by the loss of high-paying technology and finance jobs among others.
Persons: Jerome Powell, Sung Won Sohn, Payrolls, Ryan Sweet, Milton Ezrati, Yelena Shulyatyeva, Lucia Mutikani, Daniel Wallis Organizations: Labor, Federal Reserve, U.S, Loyola Marymount University, Institute for Supply, Board, Oxford Economics, West Chester Pennsylvania, BNP, Thomson Locations: y WASHINGTON, Los Angeles, payrolls, West Chester, nonfarm, New York
But the dampening effect of higher rates has confronted the robust income and spending of many households and the staying power of businesses — both buttressed by emergency pandemic support from Congress and the Fed. Though families, business managers and investors alike have had to contend with the frustrating realities of inflation and economic uncertainty, growth has continued, almost defiantly. Some economists think it might be possible to wrestle inflation down fully without causing a big jump in unemployment. “The environment of ‘pick the data point that supports your narrative’ persists,” said Oren Klachkin, lead U.S. economist at Oxford Economics. “I still think a recession is more likely than not.”
Persons: Ellen Zentner, Morgan Stanley, , Oren Klachkin, Organizations: Federal Reserve Bank of Cleveland, Oxford Economics
July 6 (Reuters) - The world's largest emitters of carbon dioxide (CO2) and other greenhouse gases are coming under fresh scrutiny after global temperatures averaged 17.01 degrees Celsius (62.62 Fahrenheit) on Monday, the highest ever recorded. PRESSURE POINTSChina, the world's single largest CO2 polluter since 2005, has come under particular scrutiny after the country generated over 30% of global CO2 discharge in 2022, according to the Energy Institute Statistical Review of World Energy. CO2 emissions by key region since 1990India, already the world's third largest CO2 polluter in 2022, is seen increasing total CO2 discharge until 2040, while CO2 emissions in Indonesia - the seventh largest polluter last year - may not peak until 2050. Brazil, number 13 on the CO2 list in 2022, also looks set to keep CO2 discharge totals climbing over the coming years. However, each nation also has aggressive plans for reducing energy sector emissions and lowering reliance on fossil fuels.
Persons: Gavin Maguire, Kim Coghill Organizations: El, Energy Institute, World Energy, Centre for Research, Energy, Clean, Oxford Economics, Reuters, Thomson Locations: South, Southeast Asia, Northern China, North Africa, North America, El Nino, China, Japan, South Korea, United States, Germany, Europe's, North East Asia, South East Asia, India, Indonesia, Brazil, Turkey, Nigeria, Egypt, Mexico, The Philippines
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailSouth Korea's employment growth has been healthy and strong, economist saysSung Eun Jung of Oxford Economics talks about why there is employment growth in South Korea and the "squeeze" in real wages for households as inflation soars.
Persons: Sung Eun Jung Organizations: Oxford Economics Locations: South Korea
In Asia, while factory activity expanded marginally in China, it contracted in Japan and South Korea as Asia's economic recovery struggled to maintain momentum. REUTERS/Siyi LiuChina's Caixin/S&P Global manufacturing PMI eased to 50.5 in June from 50.9 in May, the private survey showed. The figure, combined with Friday's official survey that showed factory activity extending declines, adds to evidence the world's No. South Korea's PMI fell to 47.8 in June, extending its downturn to a record 12th consecutive month on weak demand in Asia and Europe. Factory activity also contracted in Taiwan, Vietnam and Malaysia, the PMI surveys showed.
Persons: Rory Fennessy, lockdowns, Toru Nishihama, Siyi Liu China's, Jonathan Cable, Sam Holmes, David Evans Organizations: PMI, European Central Bank, Oxford Economics, P, Dai, Research, REUTERS, P Global, Reuters, Jibun, of, International Monetary Fund, Thomson Locations: Japan, South Korea, China, TOKYO, Europe, Britain, Asia, United States, European, U.S, Dezhou, Shandong province, South, Taiwan, Vietnam, Malaysia, of Japan's
Growth is expected to pick up, but further increases in interest rates could act as a brake on the economy. France’s annual inflation rate fell to 5.3 percent in June, from 6 percent in May. Germany, the largest economy in Europe, saw a rise in its annual inflation rate to 6.8 percent, up from 6.3 percent in May. Inflation rates in Germany are expected to resume their fall in September. After adjusting for inflation, profits were above their prepandemic level while workers’ compensation was 2 percent below the trend in the first quarter of this year.
Persons: Gita Gopinath, Christine Lagarde, , Giorgia, , Lucrezia Reichlin, Riccardo Marcelli Fabiani, Price, Lagarde Organizations: International Monetary Fund, London Business School, Oxford Economics, Ukraine — Locations: Sintra , Portugal, France, Italy, Russia, Ukraine, Germany, Europe
LONDON, June 29 (Reuters) - Major British lenders on Thursday announced another increase in mortgage rates offered via brokers, pushing many products above the 6% mark in painful news for many homeowners and potential buyers. Barclays (BARC.L), NatWest (NWG.L) and Virgin Money (VMUK.L) informed brokers that rates on many mortgage offerings will rise again on Friday, according to emails seen by Reuters. "As mortgage rates continue to rise, the property market is being pushed further towards a cliff edge and there's no real help in sight," mortgage broker Lewis Shaw of Shaw Financial Services said. Two-year swap rates - a key determinant of mortgage borrowing costs - have soared by 0.83 percentage points over the course of June. Mortgage rates of 6% represent the same financial burden from repayments as they did in the late 1980s, even though mortgage rates were around 13% then, according to housing market analyst Neal Hudson, founder of consultancy BuiltPlace.
Persons: Lewis Shaw, Andrew Goodwin, Liz Truss, Neal Hudson, Andy Bruce, William Schomberg, Sachin Ravikumar Organizations: Bank of England, Barclays, NatWest, Virgin, Reuters, Nationwide Building Society, Shaw Financial Services, Oxford, Oxford Economics, Thomson
Washington, DC CNN —New home sales surged in May, as buyers looked to new construction as an alternative to the low inventory of existing homes for sale. Homeowners with ultra-low mortgage rates are reluctant to sell and buy another home at a much higher rate. Sales of existing homes have been down for the past few months, while new home sales have been rising. Mortgage rates reached as high as 6.79% at the end of May as uncertainty moved through the financial industry due to the debt ceiling standoff. This increase in mortgage rates cooled mortgage applications.
Persons: , , Nancy Vanden Houten, Ryan Sweet, Eugenio Aleman, Raymond James, ” Aleman Organizations: DC CNN, US Department of Housing, Urban Development, Census Bureau, Oxford Economics, Federal Reserve Locations: Washington, Northeast, South, West
The small South American country of Uruguay has already cut rates, by 25 basis points in April. Chile's central bank kept its key interest rate on hold at 11.25% last week, but said if recent positive trends continue, it could begin cutting the rate in the short term. Forecasts are pointing to a rate cut next month, said Cesar Guzman, macroeconomic analyst at Santiago-based Grupo Securities. Even there, however, the central bank opted to hold rates steady in June as monthly inflation slowed for the first time in half a year. "Colombia and Mexico will be the last ones to cut rates, possibly in the fourth quarter."
Persons: Joan Domene, Reuters Graphics Goldman Sachs, Alberto Ramos, Cesar Guzman, Luiz Inacio Lula da Silva, Kimberley Sperrfechter, Andres Pardo, Marion Giraldo, Natalia Ramos, Fabian Cambero, Nelson Bocanegra, Anthony Esposito, Jonathan Oatis Organizations: MEXICO CITY, U.S . Federal Reserve, European Central Bank, Bank of England, America, Oxford, Reuters Graphics, Grupo Securities, Reuters, Capital Economics, XP Investments, Thomson Locations: MEXICO, Chile, Brazil, Mexico, American, Uruguay, Santiago, COLOMBIA, America, Argentina, Colombia, Bogota
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