Tag: Economist

Why China’s Yuan, not the Euro, could become the dominant global currency
Unemployment

Why China’s Yuan, not the Euro, could become the dominant global currency

David talked about why the Euro hasn’t challenged the Dollar as an international currency, despite being used by more people than the American currency.
So surely that should mean that the Euro becomes a dominant currency, right?
After all, both trading blocks are made up of very big spenders indeed.
What we have seen is the Euro when it was launched, was launched as a currency that represented a very disparate range of countries with very different fortunes.
That meant because you had to have one interest rate to represent all those countries what you saw was their economies doing wildly different things.
You had an interest rate that was set to suit the economies largely of the largest countries like Germany and France.
In fact, many central bankers when the Euro was launched around the turn of the millennium did express openly their concerns that this could threaten the Dollar’s position.
Will the Euro last?
It has lasted so far and it has been through a pretty major test over the last decade.
If you look at the what happened with the financial crisis If you look at the what happened with Greece, in particular, and the way Germany and the richer neighbours had to turn around and say “Well, what are we going to do about this crisis?”

Economists think Australia’s jobs boom continued in March
Unemployment

Economists think Australia’s jobs boom continued in March

Australia has created jobs in each of the past 17 months, the longest consecutive stretch on record.
Economists expect Australia’s jobs juggernaut will extend into an 18th consecutive month in March.
Australia has created jobs in each of the past 17 months, the longest consecutive stretch on record.
Over that period, employment has increased by a mammoth 420,700, the second-highest level over a 12-month period on record.
Of those, 327,600 were full-time positions.
Economists expect Australia’s jobs juggernaut will extend into an 18th consecutive month in March.
Of the 21 polled by Bloomberg, the median forecast looks for an increase in employment of 20,000.
This increase reflects strong levels of population growth along with robust job market conditions encouraging more Australians not previously in the labour market to look for work.
Economists expect unemployment to fall to 5.5% in March, still above the 5% level many believe it will need to hit, or even fall below, before wage pressures begin to build.
BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future.

Jobs trend still strong after ‘disappointing’ March number, economists say
Unemployment

Jobs trend still strong after ‘disappointing’ March number, economists say

Here are some comments from economists on the March payrolls report, showing 103,000 new jobs created in the month and the unemployment rate holding at a 17-year low of 4.1%.
• “A disappointing payroll figure, but the trend remains strong — weather appears to have been a factor in both February (+) and March (-).” — Scott Brown, Raymond James & Associates.
• Pantheon Macroeconomics’ Ian Shepherdson said neither the initial number for February nor the March headline number was “indicative of the trend.” “Should mean-revert to about 200k in April,” he said.
The 313k #nfp initial print for feb was not indicative of the trend; nor is the103k march reading.
— Ian Shepherdson (@IanShepherdson) April 6, 2018 • Here’s Andrew Grantham of CIBC Economics on potential market reaction: “With the wage figures no higher than expected, markets are likely to focus more on the headline payrolls print and as such today’s data could be slightly negative for the US$ DXY, -0.31% and positive for fixed income TMUBMUSD10Y, -1.81% .
Eventually we’ll have get used to monthly gains of ~100k or less.
— Jed Kolko (@JedKolko) April 6, 2018 • The National Association of Home Builders’ Robert Dietz called it a weak month for residential construction hiring — but said he expects a near-100,000 job gain this year.
The sector lost on a net basis 7,000 jobs in March.
I expect a near 100,000 job gain in 2018.
Sector payroll employment now stands at 2.79 million.

Here’s what economists are saying about the RBA’s interest rate decision
Unemployment

Here’s what economists are saying about the RBA’s interest rate decision

Many economists suspect the RBA may need to hold interest rates lower for longer.
Now that they’ve had time to analyse the statement, it’s time to see what economists have made of the RBA’s latest offering.
Firstly, the RBA acknowledged the rise in funding costs in the US and a number of other countries including Australia.
Bubbling away in the background, however, is the moderation in the Australia labour market indicators which, should they persist, add to the emerging risks for the economy from higher funding costs and increased global trade tension.
As it stands, the central bank needs growth to average a touch over 0.8% per quarter in the first half of the year to be confident that its 2018 growth forecasts are on track.
Credit spreads have also widened a little, but remain low.” The Bank goes on to say that the “tightening of conditions in US dollar short-term money markets [over and above that due to Fed tightening]…has flowed through to higher short-term interest rates in a few other countries, including Australia.” The domestic part of the statement is largely unchanged, with the growth outlook still upbeat, but the flow through into wages and prices is expected to be slow.
Paul Dales, Capital Economics The RBA’s comment in the policy statement that “equity market volatility has increased from the very low levels of last year, partly because of concerns about the direction of international trade policy in the US” comes on the back of concerns highlighted in the minutes of March’s RBA policy meeting that a rise in trade protection would hurt Australia.
The RBA also drew attention to the “tightening of conditions in US dollar short-term money markets…for reasons other than the increase in the federal funds rate” that “has flowed through to higher short-term interest rates in a few other countries, including Australia.” In other words, events in the US have led to a spike in the short-term funding costs for Australian banks.
This comes on top of the domestic issues that already mean that the RBA will probably keep interest rates at 1.5% for longer than most analysts and the financial markets expect.
Our view is that the weak housing market and low wage growth will prevent GDP growth from accelerating from 2.3% last year to 3.0% as the RBA is hoping and will keep underlying inflation below 2.0%.

Top economists: Expect the economy to heat up further this year
Unemployment

Top economists: Expect the economy to heat up further this year

Americans struggling to save or pay down credit card debt should then view the rest of the year as an opportunity to become more financially secure.
Economists see improving jobs picture The jobs picture continues to improve more than a decade removed from the start of the Great Recession.
The unemployment rate rests at 4.1 percent, while firms added an average of 192,000 workers a month over the past three months.
Investors, it seems, will just have to get used to higher worker pay, according to our survey of economists.
Of the economists polled, 79 percent forecast an unemployment rate below 4 percent by February 2019, and 84 percent expect wage growth to accelerate this year.
Another factor to consider is how aggressively the Federal Reserve, under new Chair Jerome Powell, will raise interest rates to stop the economy from overheating.
Almost 4 in 5 of our panelists expect the Fed to hike rates three times this year, similar to last year.
The economists were split on their predictions for the 10-year Treasury yield, but 42 percent forecast the yield to rise to 3.5 percent or more by next spring.
“By the latter part of 2018, markets may be anticipating another four rate hikes by the Federal Reserve in 2019 as the Tax Cuts and Jobs Act provides the economy with a significant thrust,” says Lynn Reaser, chief economist at Point Loma Nazarene University.
Responding were: Scott Anderson, Bank of the West, chief economist; Bob Baur, Principal Global Investors, executive director and chief global economist; Scott Brown, Raymond James, chief economist; Gregory Daco, chief U.S. economist, Oxford Economics; Bill Dunkelberg, chief economist, NFIB; Robert Hughes, American Institute for Economic Research, senior research fellow; Hugh Johnson, chairman and chief investment officer, Hugh Johnson Advisors; Bernard Markstein, president and chief economist, Markstein Advisors; Chad Moutray, chief economist, National Association of Manufacturers; Joel L. Naroff, president, Naroff Economic Advisors; Michael Neal, National Association of Home Builders, assistant vice president of forecasting and analysis; Jim O’Sullivan, High Frequency Economics, chief U.S. economist; Satyam Panday, S&P Global, senior economist; Lindsey Piegza, Ph.D., Stifel chief economist, managing director; Lynn Reaser, Chief Economist, Point Loma Nazarene University; Sean Snaith, College of Business Administration, University of Central Florida; Lawrence Yun, National Association of Realtors, chief economist; Mark Zandi, chief economist, Moody’s Analytics.

This economist explains why slower Australian jobs growth could keep the RBA sidelined even longer
Unemployment

This economist explains why slower Australian jobs growth could keep the RBA sidelined even longer

Australian employment increased by over 420,000 in the past year.
The fact that employment has now increased in each of the past 17 months — the longest consecutive stretch of gains on record — only acts to underline just how strong labour market conditions have been.
“We expect that employment growth will remain above average through most of this year before easing to around 1.5% by the end of 2018 as the large gains in 2017 fall out of the annual calculation,” she said in a note.
“The strength of the labour market over the past year appears to have attracted people back into the labour force, with the participation rate approaching record high levels as women and older men enter the workforce,” she says.
“If this trend continues… the unemployment rate will only edge down from 5.6% currently to around 5.2% by the end of 2019.” While such an outcome would fit with current unemployment forecasts offered by the Reserve Bank of Australia (RBA), Hickie says that given still-elevated levels of underutilised workers in Australia, along with the experience seen in other advanced economies in recent years, will likely keep Australian wage growth incredibly subdued.
“Second, the longer-term structural forces such as globalisation and technological change, which have weakened the relationship between spare capacity and wage growth globally, are likely to persist in Australia.” Hickie says that Australia’s natural rate of unemployment, also known as the non-accelerating inflation rate of unemployment, or NAIRU, is probably closer to 4% than 5%, meaning the prospects for a steep lift in wage growth in the coming years appears unlikely.
“We expect wage growth to rise only modestly in the coming few years from 2.1% currently to 2.5% by the end of 2019,” she says.
“This is a key reason why we expect underlying inflation to remain below the bottom of the RBA’s 2-3% inflation target over the next two years and why we doubt the RBA will begin to raise rates until the second half of 2019.” NOW WATCH: Money & Markets videos Want to read a more in-depth view on the trends influencing Australian business and the global economy?
BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future.
Sign up for free at research.businessinsider.com.au.

Edmonton unemployment rate at 6.9% but ‘it came down for the wrong reason’: economist
Unemployment

Edmonton unemployment rate at 6.9% but ‘it came down for the wrong reason’: economist

In Edmonton, employment was down by 5,000 in February 2018, but unemployment fell to 6.9 per cent.
That’s cause for concern to City of Edmonton chief economist John Rose, who said a lower jobless rate is usually good news.
“Unfortunately, in this month, it came down for the wrong reason — that is people became discouraged and left the labour force.
You want to see people continuing to engage, continuing to look for work.” READ MORE: NAFTA termination could reportedly result in loss of 85k jobs in Canada Over the next few months, Rose expects Edmonton should see unemployment stay the same, as any job gains will attract more people to the labour force and keep that number even.
The province came out in the positive, but it was a similar story when it comes to the labour force.
Just 2,000 jobs were added, as 12,000 part-time positions more than made up for 10,000 full-time jobs that were lost.
READ MORE: Canada’s unemployment rate down to 5.8% after surge in part-time work Rose said it’s not encouraging to see such big losses in full-time work.
“You really want to see significant growth in full-time employment because that’s really what boosts incomes and boosts people’s confidence in terms of making major expenditures.” Both Calgary and Edmonton remain in the top four Canadian cities with the highest jobless rates, with Calgary’s unemployment going up by 0.3 per cent to 7.9.
READ MORE: Alberta’s unemployment rate drops to 6.9% as more people find jobs: StatCan Year over year, the numbers are looking better.
Employment increased by 12,000 full-time positions in Edmonton compared to last February, and over 62,000 full-time jobs across Alberta.

The overheating economy could crash in 2019, this top forecaster says
Unemployment

The overheating economy could crash in 2019, this top forecaster says

Rex The U.S. economy is on a tear right now, but it can’t last for long, says Joerg Angelé, a senior economist for Austria’s Raiffeisen Bank International and the winner of the February Forecaster of the Month award from MarketWatch.
“I’m very optimistic about the U.S. economy in the medium term,” Angelé said in a phone interview from Vienna.
“Everything is pointing to an overheating economy.” The economy is already growing much faster than its long-term potential rate of around 1.5%, with the unemployment rate “way below” its long-term natural rate of around 5%, Angelé said.
And that’s before the impact of tax cuts and budget stimulus hits.
He expects the economy to grow at almost 3% this year.
He expects four rate hikes this year and possibly two more in early 2019.
Read: Strong job growth isn’t enough to push Fed to get more aggressive on interest rate hikes The rising tide of protectionism is a wild card in his forecast, he admits.
The bank is one of Austria’s largest banks, and has branches and operations throughout Central and Eastern Europe.
Angelé’s forecasts on six of the 10 indicators we track were among the 10 most accurate out of 44 teams.
The MarketWatch median consensus published in our Economic Calendar includes the predictions of the 15 forecasters who’ve earned the most points in our contest over the past 12 months, plus the forecast of the most recent winner of the monthly contest.

Jobs report ‘unbelievably strong’ but earnings disappoint, economists say
Unemployment

Jobs report ‘unbelievably strong’ but earnings disappoint, economists say

Here are some early comments on the February employment report, which showed a better-than-expected 313,000 jobs created in the month and the unemployment rate at 4.1%.
The 12-month increase in worker pay slipped to 2.6% from 2.8%.
• “Payrolls came in substantially stronger than expected, though average hourly earnings is a disappointment.
That said, it’s possible that the rebound in the workweek put some downward pressure on AHE because salaried workers would have earned less per hour than they would have during the shorter workweek in January.
This is a very encouraging report.” — Thomas Simons, senior vice president, fixed income economics, Jefferies LLC.
Unbelievably strong Feb jobs report but where are the big wage gains to go with it: February payroll jobs +313k Dec-Jan revisions +54k Unemployment rate 4.1% (unchngd) LabFrcPartRate +0.3 ppt EmpPopRatio +0.3 ppt U6 8.2% (unchngd) wages +2.6% y/y — Chad Stone (@ChadCBPP) March 9, 2018 • Economist Joseph LaVorgna said the report was “perfect for risk assets.” #employment report is perfect for risk assets especially #StockMarket.
313k increase in #NFP with upward revisions.
— Joseph A. LaVorgna (@Lavorgnanomics) March 9, 2018 • Stu Hoffman, senior economic advisor at PNC Financial, said the report set the stage for a Fed interest-rate hike “for sure” in two weeks, “but only 2 more this year.” Hourly wages up 0.2% in Feb and gain from year ago edges down to 2.6%.Takes pressure off fear of fast rise in wages leading to more aggressive FOMC rate hikes.
FOMC hike in two weeks for sure but only 2 more this year#FOMC — stuart hoffman (@StuHoffmanPNC) March 9, 2018 • “While the unemployment rate failed to tick back down as expected, remaining at 4.1%, that was due to a healthy rise in labor force participation.” — Andrew Grantham, CIBC World Markets.
• “The massive 313,000 increase in nonfarm payrolls in February, the biggest in 18 months, together with the 54,000 upward revision to gains in the preceding two months, illustrates that the economy is doing much better than the recent incoming activity data have suggested.” — Paul Ashworth, Capital Economics.

U.S. adds stronger-than-expected 234,000 private sector jobs in January: ADP
Unemployment

U.S. adds stronger-than-expected 234,000 private sector jobs in January: ADP

The numbers: Private-sector employment was strong for the second straight month in January, as employers added 234,000 jobs, Automatic Data Processing Inc. reported Wednesday.
Economists had expected an increase of 185,000 private-sector jobs, compared with December estimate of a gain of 250,000.
What happened: Details of ADP’s report showed that small private-sector businesses added 58,000 jobs in January, medium-sized businesses added 91,000 and large businesses added 85,000.
Big picture: Economists use ADP’s data to get a feeling for the Labor Department’s employment report, which will be released Friday and covers government jobs in addition to the private sector.
The firm’s estimate for December private payrolls was 104,000 more than the government data showed.
Economists think the trend in job growth will slow over time as the labor market has tightened, but that slowdown won’t show up yet.
Economists polled by MarketWatch expect the government’s report, to be released on Friday, to show that nonfarm payroll jobs jumped by 185,000 after rising by 148,000 in December.
: Mark Zandi, chief economist for Moody’s Analytics, said on CNBC that the data show the labor market is “excruciatingly tight.” He predicted the unemployment rate would drop from 4.1% into the mid 3% range.
The Dow industrials DJIA, +0.70% looked to stabilize after a two-day bruising that wiped out some 500 points from the average.
The benchmark 10-year Treasury yield TMUBMUSD10Y, -0.24% remained lower after the data, though remain above 2.7%.