The US consumer wasn't in great shape in April, and may have gotten worse in May. Bloomberg reports:
Confidence among U.S. consumers fell in May to the lowest level in 28 years, pointing to slower spending as gasoline prices reach record levels and job losses mount.
The Reuters/University of Michigan final index of consumer sentiment decreased to 59.8, the weakest reading since June 1980, from 62.6 in April. The measure averaged 85.6 in 2007...
Earlier today, the Commerce Department in Washington reported that consumer spending rose 0.2 percent in April after a 0.4 percent increase in March. Incomes grew 0.2 percent, bolstered in part by the government's tax rebates, and the Federal Reserve's preferred measure of inflation moderated, the report showed.
But if there is a silver lining in yesterday's data, it is that the downturn is not accelerating.
Also today, the National Association of Purchasing Management-Chicago said its measure of U.S. business activity in May showed contraction for a fourth straight month as production decreased and costs rose. The NAPM-Chicago index rose to 49.1 this month, higher than forecast, from 48.3 in April. Figures lower than 50 signal contraction.
There was a similarly hopeful sign from the ECRI. Reuters reports:
The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index slipped to 132.8 in the week to May 23 from 133.0 in the prior period, revised down from 133.1...
The index's annualized growth rate improved to negative 6.0 percent, its highest since the week to December 21, from minus 6.6 percent.
But data out from other economies yesterday mostly took a turn for the worse.
Bloomberg reports that Canada's economy unexpectedly shrank in the first quarter as the impact of the US slowdown becomes apparent.
Gross domestic product contracted at a 0.3 percent annualized rate in the first quarter to C$1.33 trillion ($1.34 trillion), the first drop in almost five years, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg said the growth rate would slow to 0.4 percent from 0.8 percent in the fourth quarter, according to the median of 22 estimates...
Falling automobile production caused a 3 percent drop in manufacturing in the first quarter and a 1.1 percent decline in exports, Statistics Canada said. Almost all of Canada's automobile production is shipped to the U.S., and excluding car and truck production and related industries the economy would have grown in the first quarter, the statistics agency said.
Japan's economy is also at risk of a contraction. From Reuters.
Unemployment in Japan hit a seven-month high while household spending, industrial output and housing starts fell last month in further signs of a troubled economy where inflation is seen heading for another decade high...
Overall household spending in April fell 2.7 percent from a year earlier, a much bigger decline than the 0.9 percent fall that the market had expected...
The employment outlook is also weak. The jobs-to-applicants ratio for March was 0.93, meaning 93 jobs were available per 100 applicants, a three-year low.
Seasonally adjusted unemployment rose to a seven-month high of 4.0 percent, with a record decline in the number of workers in the construction sector compared with a year earlier...
Japan's industrial output dipped 0.3 percent in April, although manufacturers forecast a 4.7 percent jump in May...
Housing starts in April fell 8.7 percent from the same month last year, due partly to the lingering impact of tighter building regulations implemented last June, marking the 10th straight month of decline.
Inflation receded in April, but the respite is likely to prove temporary.
Annual inflation slowed to 0.9 percent in April, thanks to a short-lived cut in gasoline tax, but economists warned it was likely to bounce back to around 1.4 percent in May figures, raising the prospect of stagflation as Japan's economy slows.
A bounce back up in inflation was exactly what the euro area got in May. From Bloomberg yesterday:
The inflation rate in the euro area rose to 3.6 percent, matching a 16-year high, from 3.3 percent in April, the European Union statistics office in Luxembourg said in a statement today. Economists had forecast a 3.5 percent rate, according to the median of 36 estimates in a Bloomberg survey...
Separate figures published by the statistics office today show that unemployment in the euro area remained at a record low of 7.1 percent in April...
Retail sales in Germany, Europe's largest economy, unexpectedly dropped for a second consecutive month in April, according to figures published today, as faster inflation left consumers with less money.
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