Latest news with #OxfordEconomics
France 24
a day ago
- Business
- France 24
US Fed's preferred inflation gauge picks up as tariff effects loom
The personal consumption expenditures (PCE) price index climbed 2.3 percent last month from a year ago, the Commerce Department said in a report. This was in line with analyst expectations and a slight acceleration from April's 2.2 percent increase. But excluding the volatile food and energy sectors, the PCE price index was up 2.7 percent, rising from April's 2.6 percent uptick, the report showed. But consumer spending declined, after Trump's fresh tariffs in April dragged on consumer sentiment. PCE dropped by 0.1 percent from the preceding month, reversing an earlier rise. While Trump has imposed sweeping tariffs on most US trading partners since returning to the White House in January -- alongside higher rates on imports of steel, aluminum and autos -- these have had a muted effect so far on inflation. This is partly because he held off or postponed some of his harshest salvos, while businesses are still running through inventory they stockpiled in anticipation of the levies. But central bank officials have said they expect to learn more about the impact of tariffs over the summer, meaning they will be scrutinizing data in the coming months. 'Clear weakening' "The experience of the limited range of tariffs introduced in 2018 suggests that pass-through to consumer prices is intense three-to-six months after their implementation," warned economists Samuel Tombs and Oliver Allen of Pantheon Macroeconomics in a note. They also flagged weakness in consumer spending, in part due to a pullback in autos after buyers rushed to get ahead of tariffs. But spending on services was tepid even after excluding volatile components, they said. "There has also been a clear weakening in discretionary services spending, notably in travel and hospitality," said Michael Pearce, deputy chief US economist at Oxford Economics, in a note. This reflects "the chilling effect of the plunge in consumer sentiment," he added. Between April and May, the PCE price index was up 0.1 percent, the Commerce Department report showed. As a July deadline approaches for higher tariff rates to kick in on dozens of economies, all eyes are also on whether countries can reach lasting trade deals with Washington to ease the effects of tariffs. For now, despite the slowing in economic growth, Pearce said risks that inflation could increase will keep the Fed on hold with interest rates "until much later in the year."
Yahoo
a day ago
- Business
- Yahoo
US labor market adds 139,000 jobs in May, unemployment holds steady at 4.2%
The May jobs report showed the US labor market remained largely resilient amid President Trump's new tariff policy. The US economy added 139,000 nonfarm payrolls in May, more than the 126,000 expected by economists. The unemployment rate held steady at 4.2%. In April, the US economy added 177,000 jobs while the unemployment rate held flat at 4.2%. Those figures were revised lower on Friday to reflect that the economy added 147,000 jobs that month. Revisions from March and April showed the US labor market added 95,000 fewer jobs than initially thought. "We're seeing a softening in the labor market," EY chief economist Gregory Daco told Yahoo Finance. "That's undeniable. But it's not a retrenchment in the labor market. And that's what was feared." Stocks rallied after the report, with the Dow Jones Industrial Average (^DJI), S&P 500 (^GSPC), and Nasdaq Composite (^IXIC) all rising about 1% in early trading. Average hourly earnings in May rose 0.4% over the last month and 3.9% over the prior year. Economists expected wages to rise 0.3% over the last month and 3.7% over the prior year. Meanwhile, the labor force participation rate fell to 62.4% from 62.6% the month prior. "The May employment report was mixed but doesn't alter our assessment of the labor market or the economy," Oxford Economics chief US economist Ryan Sweet wrote in a research note following the release. "We also remain comfortable with the forecast for the Federal Reserve to wait until December before cutting interest rates as the inflation impact of tariffs is still coming and will be more visible this summer." The May jobs report encapsulated the week of May 12, meaning it included the initial reaction to the US-China 90-day tariff pause. Additionally, Trump's baseline tariffs of 10% on various countries were in effect. Amid the tariff back-and-forth other signs of slowing in the jobs market have begun to emerge in the data. On Wednesday, ADP data showed the private sector added 37,000 jobs in May, the lowest monthly total in more than two years. Then on Thursday, weekly filings for unemployment benefits hit their highest level since October 2024. Meanwhile, continuing claims hovered near their highest level in nearly four years. Read more: How jobs, inflation, and the Fed are all related Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer. Sign in to access your portfolio
Khaleej Times
2 days ago
- Business
- Khaleej Times
US labour market softening as more people remain on unemployment rolls
The number of Americans filing new applications for jobless benefits fell last week, but work opportunities are becoming scarce as businesses remain hesitant to hire because of an uncertain economic outlook, raising the risk of the unemployment rate increasing in June. The weekly jobless claims report from the Labour Department on Thursday, the most timely data on the economy's health, also showed state unemployment benefit rolls in mid-June increasing to the highest level in 3-1/2 years. Though layoffs remain historically low, hiring has been tepid, with economists saying President Donald Trump's broad import tariffs are making it difficult for businesses to plan ahead. But the labour market slowdown was not yet alarming enough for the Federal Reserve to resume cutting interest rates in July, they said. Fed Chair Jerome Powell told lawmakers this week the U.S. central bank needed more time to gauge if tariffs raised inflation before considering lowering rates. "The data are consistent with softening of labor market conditions, particularly on the hiring side of the labour market equation," said Nancy Vanden Houten, lead economist at Oxford Economics. "For now, we don't think the labour market is weak enough to prompt the Fed to cut rates before December, but the risk is increasing that once the Fed starts to lower rates, it will have some catching up to do." Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 236,000 for the week ended June 21, the Labor Department said. Economists polled by Reuters had forecast 245,000 claims for the latest week. The data included last week's Juneteenth National Independence Day holiday, which likely injected a downward bias. Cutting through the technical distortions, layoffs have picked up amid headwinds from the import duties. The number of people receiving benefits after an initial week of aid, a proxy for hiring, jumped 37,000 to a seasonally adjusted 1.974 million during the week ending June 14, the highest level since November 2021, the claims report showed. The so-called continuing claims covered the week during which the government surveyed households for June's unemployment rate. Continuing claims increased between the May and June survey weeks, leading economists to expect that the unemployment rate rose to 4.3% in June from 4.2% in May. A survey from the Conference Board this week showed the share of consumers who viewed jobs as being "plentiful" dropped to the lowest level in more than four years in June. "It is likely that the unemployment rate will tick up at least to 4.3% in June, with material risk of it rising to 4.4%," said Abiel Reinhart, an economist at J.P. Morgan. June's employment report is due next week. The U.S. central bank last week left its benchmark overnight interest rate in the 4.25%-4.50% range where it has been since December. Stocks on Wall Street rose. The dollar hit a 3-1/2-year low against the euro and sterling as traders bet on more rate cuts than currently anticipated. U.S. Treasury yields fell. GDP REVISED LOWER The Trump administration's tariffs are distorting the economic picture and this was reinforced by other data on Thursday. Gross domestic product decreased at a downwardly revised 0.5% annualized rate in the first quarter, the Commerce Department's Bureau of Economic Analysis (BEA) said in its third estimate of GDP. The economy was previously reported to have contracted at a 0.2% pace. It grew at a 2.4% rate in the fourth quarter. A front-running of imports ahead of the sweeping tariffs accounted for the bulk of the decrease in GDP last quarter. The revision to GDP reflected a sharp downgrade to consumer spending, which is now estimated to have increased at only a 0.5% pace instead of previously reported 1.2% rate. Consumer spending grew at a robust 4.0% pace in the fourth quarter as households engaged in pre-emptive buying of goods like motor vehicles to avoid higher prices from import duties. The fading boost from frontloading of purchases by consumers meant underlying demand in the economy was not as strong as previously reported. Growth in final sales to private domestic purchasers, closely watched by policymakers, was cut to a 1.9% rate from the previously reported 2.5% pace. While the flow of imports has since subsided, exports are taking a hit from the trade tensions. A third report from the Census Bureau showed the goods trade deficit widened 11.1% to $96.6 billion in May, with exports dropping $9.7 billion to $179.2 billion. But goods imports were little changed at $275.8 billion, positioning GDP for a sharp rebound this quarter. The Atlanta Federal Reserve is forecasting GDP accelerating at a 3.4% rate in the second quarter. Given the gyrations from imports, economists cautioned against interpreting the anticipated bounce back in GDP as a sign of economic strength. Temporary pauses on higher tariffs expire in July and mid-August, and it is unclear what happens next. Data on retail sales, the housing and labor markets have suggested economic activity is softening. "The difficulty of accurately capturing the extraordinary foreign-trade and inventory gymnastics that companies undertook to avoid U.S. tariffs created serious measurement challenges that will linger for some time to come," said Lou Crandall, chief economist at Wrightson ICAP. Though a fourth report from the Census Bureau showed orders for long-lasting manufactured goods rebounded sharply in May because of strength in the volatile commercial aircraft segment, tariff uncertainty remained a constraint for business spending. Orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, jumped 16.4%. That was the largest increase since July 2014 and followed a 6.6% decline in April. Commercial aircraft orders soared 230.8%. Non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rebounded 1.7% after falling 1.4% in April. Shipments of core capital goods rose 0.5% after being unchanged in the prior month. "Rebounding orders in May could simply reflect a resumption or normal activity after tariffs were paused," said Veronica Clark, an economist at Citigroup. "The level of core capital goods orders is flat since the start of the year."
USA Today
2 days ago
- Business
- USA Today
What damage could potential Iran retaliation do to your pocketbook
Was Iran's missile attack on the U.S. base in Qatar the only retaliatory measure it will take against the United States following the bombing of its three nuclear sites? And will the ceasefire hold between Israel and Iran? Answers to those questions could determine how much we pay in every U.S. store—not just at the pump, according to a set of new reports. One model even suggests the inflation rate could more than double by the end of the year with a big enough increase in oil prices. Crude oil traders appear cautiously optimistic, though. Futures prices at 12 p.m. ET Thursday for a barrel of oil were above $65.88—lower than they were when Israel first attacked Iran on June 12. They're about $8 lower than when tensions were at their highest. President Donald Trump and others in his administration say they've ended the Israel-Iran war by dropping the huge bunker-busting bombs, but two papers this week from Oxford Economics still call the situation in the Middle East "fluid" and warn about what could happen if Iran decides to disrupt shipping in the Strait of Hormuz. Iran's Supreme Leader Ayatollah Ali Khamenei added to the uncertainty Thursday when he warned any future attacks against Iran would come at a great cost. Oil prices tumble from June 20 highs Unable to view our graphics? Click here to see them. Oxford Economics says its unlikely Iran would completely shutdown the Strait of Hormuz because they might not have the capabilities, or U.S. military would likely intervene. Iran also wouldn't likely have an interest in disrupting all oil shipping, considering more than 80% of the crude in the strait is generally bound for Asia. Where is the Strait of Hormuz How Iran could slow shipping through the Strait of Hormuz Iran might decide to make shipping in the Strait of Hormuz riskier and more expensive—largely because of higher insurance costs—by using various methods to harass and slow ships moving through the strait, according to Oxford Economics: ◾ Deploy mines ◾ Attack ships with drones and missiles ◾ Jam GPS signals The effectiveness any of these disruptions would have varying impact on prices in world oil markets. Recent history shows that the larger the rise in oil prices at the start of a conflict, the longer it typically takes for them to return to previous levels. How oil prices changed following in previous incidents How gas prices followed oil prices after Russia invaded Ukraine Not unsurprisingly, higher oil prices drive up fuel prices. It's rarely a one-to-one change, though, because of the additional costs—refining, taxes and distribution among them—by the time gasoline reaches the pump. When Russia invaded Ukraine, already inflated oil prices drove up U.S. gas prices and helped drive higher inflation throughout the economy. How a short-term, oil-price spike might affect inflation in the U.S. Oxford Economics modeled what might happen if Iran were able to slow about 70% of shipping traffic in the Strait of Hormuz and raise world oil prices by 25%. Their model showed that the annual inflation rate—which was 2.4% in May as measured by the consumer price index—could rise as high as 5.5% by the end of the year. In the same scenario, Oxford Economics projected the unemployment rate to rise from 4.2% in May to 4.5%, which could spur the Federal Reserve to start cutting interest rates to slow job losses—despite the higher prices driven by higher oil prices.
Yahoo
2 days ago
- Automotive
- Yahoo
ASEAN 2025 vehicle market forecast to be flat
ASEAN Light Vehicle (LV) sales increased by 6% YoY in April, with growth seen across the region except for in the Philippines. As such, ASEAN volumes improved from a 2% YoY expansion in Q1 2025 to 3% YoY in January-April. LV sales in the Philippines fell by 7% YoY in April, despite the Manila International Auto Show (MIAS) taking place during the month which reportedly recorded the highest number of attendees and companies launching models at the event. The country's weaker performance was likely due to a) the upcoming school year enrolment leading consumers to delay new vehicle purchases; and b) certain new models and/or booking orders from the event being delivered later. However, in terms of YTD sales, the growth rate remained positive at 6% YoY. Although the April result was weaker than expected, the 2025 outlook for the Philippines remains unchanged at 492k units, since orders and deliveries during the MIAS event could be delayed for a month. A further key development in this report is that the government is set to cancel the tax exemption on Pickups in order to increase government revenue under the proposed Capital Market Efficiency Promotion Act (CMEPA). The tax rate on Pickups will be between 4-50% depending on the price—therefore, we anticipate that consumers will rush to make Pickup purchases before the policy is implemented. It is important to note that Pickups have been exempt from taxes since 2018 under former President Duterte's Tax Reform for Acceleration and Inclusion (TRAIN) law. Vietnam's LV demand has continued to rise and increased by 35% YoY in April, which contributed to a YTD expansion of 48% YoY. This strong demand was bolstered by economic growth—GDP remained robust in Q1 2025 and rose by 6.9% YoY, while investments also grew by 7.2% YoY. Additionally, the government has extended the exemption of the registration fee for Battery Electric Vehicles (BEVs) until February 2027, having initially set the expiration date for February 2025. Since April volumes aligned with our expectations, the sales projection for Vietnam remains unchanged at 521k units in 2025. Thailand's LV sales returned to positive territory, albeit with a modest growth rate of 0.6% in April. This increase was primarily fueled by demand in the Passenger Vehicle (PV) segment, particularly for BEVs and Plug-in Hybrid Electric Vehicles (PHEVs). However, the Light Commercial Vehicle (LCV) segment experienced a significant decline, dropping by 19% YoY due to a sluggish Pickup Truck market. Recent forecasts from Oxford Economics (OE) have further downgraded Thailand's GDP growth projection for 2025 to 1.9%, down from 2.3% just a month ago and 2.5% prior to the recent geopolitical developments surrounding US President Trump's liberation day. Despite these challenges, we maintain the country's 2025 LV sales outlook at 556k units, reflecting a 2% decline YoY. However, the projection appears increasingly precarious due to ongoing political tensions and recent conflicts along the Thai-Cambodia border. Malaysia's April sales rose by 4% YoY, largely driven by national brand, Proton, and new Chinese entrant, Jaecoo. Based on recent information, volumes in the country were estimated to have marginally fallen by 0.4% YoY to 70k units in May, although this marked a surge of 14% MoM, and was the second highest monthly total of the year so far. The impressive rebound was mainly attributed to accelerations of Perodua and Honda. As such, May's performance was stronger than expected, and we have subsequently increased the 2025 outlook to 790k units, from 772k units previously. However, this still represents a 3% YoY drop from the 817k units recorded in 2024. Indonesia's LV sales increased by 8% YoY in April, predominantly due to new Chinese players including BYD, Chery, Denza, Geely and Aion. As these brands—except for Chery— only offer BEV models, it implies that the stronger performance came courtesy of early BEV adopters. However, the recent GAIKINDO report indicated that the LV market plunged by 14% YoY in May, owing to softer consumer purchasing power and cloudy economic conditions. As such, we have lowered Indonesia's sales outlook through the long term, due to a) May sales being weaker than expected due to declining commodity prices and increasing global tension; and b) the local media reporting that vehicle prices rose by an average of 7.5% per year while the income of the middle class grew by only 3-3.5% per year, hindering the demographic's ability to afford a new vehicle. As a result, Indonesia's LV sales are now projected at 748k units in 2025 and will not return to the 1.0 million unit level until 2029. Combining these developments, the overall ASEAN sales outlook remains unchanged at 3.11 million units in 2025, which is a slight drop from 3.12 million units in 2024. However, downside risks remain, and there is the potential for the market to drop below 3.0 million units due to global trade uncertainty and conflict in the Middle East. This article was first published on GlobalData's dedicated research platform, the . "ASEAN 2025 vehicle market forecast to be flat – GlobalData" was originally created and published by Just Auto, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. 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