Welcome to your weekly macroeconomic round-up, where we spotlight a few of the most significant events in the last week.
US economy added 560,000 jobs in May, slightly lower than expected
Following the surprise last month that under 300,000 jobs were added in April compared to the nearly 1 million that were expected, there was significant uncertainty surrounding Friday’s release of new jobs added in May. The data came in at 560,000, just below the consensus estimate by economists. This brings the US unemployment rate down to 5.8%, still well above the pre-pandemic low of 3.6%.
The focus for economists has shifted since last month’s surprise, towards the difficulties of US businesses in hiring workers as opposed to workers being able to find jobs. Explanations for the labour supply shortage have highlighted the reluctance of older demographics to return to work – perhaps due to health concerns or seeking early retirement. There has also been suggestion that stimulus cheques disincentivise people to return to work.
OPEC+ producers agree to slow supply increase
The cartel responsible for controlling the global supply of oil, OPEC+, agreed to stick with their original plan of only gradually increasing the supply of oil into the market, despite an improving demand outlook. The group acknowledged that although vaccinations and economic recovery were supportive for the demand for oil, the outlook remained mixed, pointing to rising COVID-19 cases in India and Japan as a concern.
The plan adds a total extra 2 million barrels of oil a day in May and June although analysts highlight that this may not be enough to stop the depletion of global oil inventories, which are now below the average level for 2015-2019. The Brent Crude Oil price rose to above $70 on the news.
China’s exports continued to surge in May fuelled by strong global demand
Exports of Chinese goods grew almost 28% from a year earlier, slightly below the pace in April but still well above the historical average. Imports into China grew by 51.1%, leaving the overall trade surplus at $45.5bn. Although demand from most regions were strong, exports to South Korea – a bellwether for world trade – surged the most since 1988, suggesting that the global recovery continues at pace.
Focus more recently has turned to the state of China’s domestic economy and policymakers’ efforts to slow loan growth. Although these efforts seem to be moderating growth at the margin, an example of this being the fall in the Caixin Chinese Services PMI last month, the Chinese economy still remains in expansionary territory.
Markets
Energy stocks were the big sector winner last week following the announcement from OPEC+, with the MSCI ACWI Energy index finishing the week +5.5%. Global equities on the whole were also up over the course of the week, with the MSCI ACWI once again making new record highs.
Last week also saw a revival in interest of so-called ‘meme’ stocks, as retail investors bought up shares in the US cinema chain AMC Entertainment Holdings. Having suffered from forced venue closures as a result of the pandemic, the AMC share price – which was trading at roughly $2 early this year – has since rallied to over $60 at its peak, on what could reasonably be regarded as speculative behaviour.
Look out for next week’s update, where we’ll be focusing on US inflation and the ECB committee meeting.
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