The euro area is experiencing higher inflation and lower confidence in the economic outlook. Bloomberg reports:
European inflation accelerated to the fastest pace in two and a half years and confidence in the economic outlook declined as surging energy prices threatened to undermine growth.
Inflation in the 17-nation euro region quickened to 2.8 percent in April from 2.7 percent, the European Union’s statistics office in Luxembourg said today in an initial estimate. Economists had expected inflation to remain unchanged, according to the median of 34 forecasts in a Bloomberg News survey. An index of executive and consumer sentiment slipped to 106.2 from 107.3 in March, the sharpest drop since May 2010, and unemployment held at 9.9 percent, separate reports showed.
Consumer confidence did improve in the US though. Bloomberg reports:
Confidence among U.S. consumers climbed in April from the lowest level in more than a year as an improving job market helped Americans to withstand rising fuel costs.
The Thomson Reuters/University of Michigan final index of consumer sentiment rose to 69.8, less than forecast and following March’s 67.5 reading that was the lowest since November 2009. The gauge was projected to rise to 70, according to the median forecast of 52 economists surveyed by Bloomberg News, and compares with a preliminary index of 69.6.
US consumer spending has been steady recently anyway, although inflation is eating into income gains. Again from Bloomberg:
Americans increased their spending in March as they paid more for gasoline and groceries, suggesting income gains may need to pick up to prevent a bigger squeeze on household finances.
Purchases rose 0.6 percent after a revised 0.9 percent gain the prior month that was higher than previously estimated, the Commerce Department said today in Washington. After adjusting for changes in prices, the spending that accounts for 70 percent of the economy rose 0.2 percent in March...
The Institute for Supply Management-Chicago Inc. said today its business barometer dropped to 67.6 in April from 70.6 in March. Figures greater than 50 signal expansion, and the median forecast in a Bloomberg News survey of economists called for a decline to 68.2...
The Commerce Department’s report showed Americans’ disposable incomes, or the money left over after taxes, rose 0.1 percent after adjusting for inflation, following no change in February, a reminder of the challenge represented by rising food and energy costs. The savings rate held at 5.5 percent...
The report showed the Fed’s preferred price measure, the so-called core inflation reading that excludes food and fuel, rose 0.9 percent in March from a year earlier, matching the 12- month gain in February. The Fed’s so-called central tendency forecast calls for a 1.3 percent to 1.6 percent increase this year.
Figures from the Labor Department today showed employment expenses rose in the first quarter at a rate that indicates inflation may stay subdued in coming months.
The 0.6 percent increase in the employment cost index from January through March followed a 0.4 percent gain in the prior three-month period, Labor Department figures showed today. Economists projected a 0.5 percent climb, according to the median estimate in a Bloomberg survey.
China's economy also appears to be holding up well. From AFP/CNA:
Manufacturing activity in China held steady in April, according to an independent reading Friday by HSBC, which suggested Beijing was likely to press on with a monetary tightening policy.
The HSBC China purchasing managers index (PMI) was 51.8, unchanged from March, the British banking giant said in a statement.