KUWAIT: The US Conference Board’s Consumer Confidence Index increased to 100.3 in July 2024, up from 97.8 in June. The Present Situation Index, reflecting consumers’ views on current business and labor market conditions, fell to 133.6 from 135.3. In contrast, the Expectations Index, which gauges consumers’ short-term outlook for income, business, and labor market conditions, improved to 78.2 from 72.8 in June. Despite this improvement, it remains below the threshold of 80, which often signals potential economic challenges ahead. This data highlights consumers’ mixed sentiments, with optimism about the future counterbalanced by concerns about current conditions and economic uncertainties.

Job openings

The number of job openings in the US remained steady at 8.2 million, with a job openings rate of 4.9 percent. Hires were little changed at 5.3 million, while total separations were also stable at 5.1 million. Within separations, quits were at 3.3 million, indicating a quits rate of 2.1 percent. The data shows stability in the labor market, with consistent job openings, hires, and separations across most industries. Notably, job openings increased in accommodation and food services by 120,000 and in state and local government by 94,000 but decreased in durable goods manufacturing by 88,000 and in federal government by 62,000.

The US Federal Reserve has decided to keep the Feds Fund rate unchanged at 5.50 percent in its latest meeting on Wednesday. The decision is considered in line with what the market was pricing. Fed Chair, Jerome Powell, delivered a statement where he stated that the economy has been improving in the second quarter, and that the Fed will adjust monetary policy if the upcoming data continues to show sustainable improvements in inflation. Markets took the statement to indicate that a September rate cut is not off the table, with 27.9 bps worth of cuts currently priced by markets. The decision comes following labor data which shows the ADP non-farm employment change at 122K, down from 155K the previous month.

A key indicator of manufacturing activity, the US Institute for Supply Management’s PMI came in at to its lowest point in eight months, coming in at 46.8 versus the expectations of 48.8. This decline was primarily attributed to a slump in new orders. However, experts caution that this downturn may overstate the industry’s overall health, as factory production surged during the preceding quarter. While the PMI has now contracted for four consecutive months, it remains above a level historically associated with broader economic expansion.

The latest employment data released by the Labor Department indicates a significant slowdown in job growth. In July, the economy added a mere 114,000 jobs, a pure contrast to the previous month’s revised figure of 179,000 and well below economists’ expectations. This marks the lowest job growth since January 2021. Moreover, the unemployment rate ticked up to 4.3 percent, signifying a loosening labor market.

While sectors like healthcare, construction, and transportation and warehousing continued to expand, the information sector experienced job losses. Wage growth also moderated, with average hourly earnings increasing by 0.2 percent month-over-month, below estimates. It’s worth noting that these figures represent a downward revision from previous months, painting an even less optimistic picture of the labor market’s trajectory. The Greenback closed the week, last trading at 103.95.

CPI flash estimate y/y

Inflation in the eurozone ticked slightly higher in July, as seen in the latest CPI flash estimates data. Where the CPI figure was at 2.6 percent y/y, higher than the previous 2.5 percent figure. Core inflation estimates were at 2.9 percent, matching the previous month yet higher than forecasts. Meanwhile, the EUR/USD pair was seen trading at around 1.0828 following the news release. The EUR/USD currency pair closed the week, last trading at 1.0908.

The Bank of England made a significant monetary policy shift on Thursday by reducing its key interest rate for the first time in over four years, bringing it down to 5 percent. This decision, reached by a narrow 5-4 vote among policymakers, marked a departure from the prolonged period of elevated rates. The central bank had maintained the interest rate at a 16-year high of 5.25 percent since August of the previous year. Despite market expectations leaning towards a rate cut, the Bank’s decision was shrouded in uncertainty until the official announcement. Governor Andrew Bailey justified the rate reduction by citing a moderation in inflationary pressures but emphasized the need for a cautious approach to avoid prematurely stimulating the economy. He underscored the importance of maintaining low inflation as a cornerstone for sustained economic growth and prosperity. The GBP/USD currency closed the week, last trading at 1.2798.

The Bank of Japan (BoJ) has increased its benchmark interest rate to approximately 0.25 percent, up from the previous range of 0 percent to 0.1 percent. This move marks the second-rate hike since 2007. Despite this increase, the BoJ expects real interest rates to remain significantly negative, maintaining accommodative financial conditions to support economic activity. This decision comes amid ongoing efforts to balance economic recovery and manage inflation pressures. The USD/JPY pair was seen trading lower following the decision.

In July, core consumer prices in Japan rose by 2.2 percent y/y, matching markets forecasts and slightly accelerating from June’s 2.1 percent increase. This marks the third consecutive month of rising inflation in Japan’s capital. Excluding fresh food and fuel costs, inflation increased by 1.5 percent down from 1.8 percent in June. The figures come a week before the Bank of Japan’s policy meeting, where markets are pricing in a 70 percent chance of a rate hike. The USD/JPY currency pair closed the week, last trading at 146.54.

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USD/KWD closed last week at 0.30550.