Econ Mornings: May 2nd, 2025
Macro releases and commentary released the morning of May 2nd, 2025
(all times are in EST)
Japanese Labor Market Weakens
Released: May 01, 2025 19:30
March data revealed a concerning softening in the Japanese labor market, with the unemployment rate rising to 2.5% and exceeding forecasts. Total employment contracted by 80k MoM, driven by a 50k jump in unemployment, while the labor force participation rate held steady at a concerningly low 81.3%. Notably, the prime-age employment rate continued its recent downward trend, falling another 0.2 ppts to 79.1%, signaling persistent challenges in maintaining workforce engagement and potentially dampening prospects for broader economic growth.
Japanese Investors Increase Overseas Holdings
Released: May 01, 2025 19:50
Japanese investors significantly bolstered their overseas holdings during the week ending April 19th, with a substantial ¥435.2 billion net purchase of foreign long-term debt marking the most robust weekly activity since early March, alongside continued net buying of foreign equities totaling ¥133.8 billion. This domestic investor activity occurred against a backdrop of considerable foreign capital flowing into Japan, with ¥278.3 billion invested in Japanese equities and ¥1600.0 billion allocated to Japanese long-term debt, suggesting a complex interplay of global and domestic investment trends.
Modest Australian Retail Sales Growth
Released: May 01, 2025 20:30 - Link
March Australian retail sales edged up 0.3% MoM and 4.3% YoY, a modest underperformance relative to anticipated gains, though overall consumer spending remains positive. While headline figures reflect modest growth, volume-based sales were flat QoQ and rose 1.2% YoY in Q1 2025, indicating a shift towards potentially lower profit margins. Disparate sector performance characterized the month, with food retail driving gains while restaurant sales declined, and lackluster results from household goods and department stores tempering broader momentum. Online sales continued to climb, albeit at a decelerating pace following a stronger February showing, suggesting a possible normalization of e-commerce activity.
FAO Food Price Index Rises
Released: May 02, 2025 04:00
April's FAO Food Price Index climbed 1.0% MoM to 128.3, reflecting a broader inflationary trend with a significant 7.6% increase YoY, particularly impacting dairy and meat sectors experiencing robust global demand. While cereal prices edged higher MoM, they remain down slightly YoY, influenced by varied performance across key grains. The Dairy Price Index saw a dramatic surge, fueled by record butter prices, contrasting with a MoM decline in vegetable oils despite underlying strength in other oils. A drop in sugar prices, attributed to Brazil's strong production and lackluster demand, provided some offset to the overall upward pressure on the index.
Italy's Labor Market Shows Signs of Slowdown
Released: May 02, 2025 04:00 - Link
Italy's labor market showed signs of softening in March, with a decline of 16k jobs and a 32k increase in unemployment, though the unemployment rate remains significantly lower than its level a year prior at 6.0%. Recent momentum has clearly slowed, as evidenced by a deceleration in total employment growth to 1.9% YoY alongside a moderation in the pace of unemployment decline to -11.8% YoY. This recent weakness is tempered somewhat by stronger, albeit still concerning, increases in employment and unemployment of 0.9% and 0.5% respectively during Q1 2025, paired with a notable decrease in the inactive population, suggesting a possible shift in labor force participation rather than a broad economic contraction.
Euro Area Unemployment Holds Steady
Released: May 02, 2025 05:00 - Link
Euro area labor market conditions remained stable in March, with the unemployment rate holding steady at 6.2%, despite forecasts for a modest decline. While the overall number of unemployed persons edged higher MoM by 83k, the annual figure remains significantly lower YoY, reflecting a continued easing of labor market pressures. Progress continues to be made among younger workers, as evidenced by a slight decrease in the youth unemployment rate, both MoM and YoY, with a notable reduction in the number of unemployed young people over the past year.
Euro Area Inflation Remains Elevated
Released: May 02, 2025 05:00 - Link
April's preliminary data reveal a persistent inflationary picture for the Euro area, with headline inflation holding steady at 2.2% YoY while core inflation accelerated to 2.7% YoY, surpassing forecasts. This hotter-than-expected core print, driven primarily by a surprisingly robust 1.3% MoM increase in services inflation, significantly outpacing last year's pace, was partially moderated by a decline in energy prices. Food price increases also contributed, with the 3.0% YoY rate marking the highest level since February 2024, although non-energy food inflation remained subdued.
US Vehicle Sales Remain Robust Amidst Trade Anticipation
Released: May 02, 2025 08:00
April US light vehicle sales, despite a -3.1% MoM deceleration to a SAAR of 17.27 million, exceeded expectations and remain robust, registering a 7.8% YoY increase fueled by continued consumer behavior anticipating tariffs, particularly evident in the strong performance of foreign auto sales. While domestic car purchases declined significantly YoY, light truck sales demonstrated resilience, and a renewed acceleration in heavy truck sales, up 12.2% MoM and 0.9% YoY, signals a positive sign for the broader transportation sector, offsetting a downward trend in overall domestic vehicle demand.
April Jobs Report Shows Resilient, Yet Complex, Labor Market
Released: May 02, 2025 08:30
April's employment report revealed a net gain of 177,000 jobs, exceeding expectations and suggesting a labor market resilient to ongoing trade uncertainties, though revisions to prior months' data tempered the overall picture. Private sector payrolls led the way, particularly in service industries, while government employment demonstrated a divergence between federal cuts, reflecting the ongoing impact of the Trump administration's policies, and increases at the state and local levels. The Household Survey corroborated the Establishment data with a surge in total employment and a slight uptick in the unemployment rate to 4.19%, driven by increased labor force participation. Despite the positive headline, subtle signs of weakness emerged, including job losses in auto manufacturing and retail trade, a rise in the number of individuals reporting job loss, and a deceleration in wage growth, especially within the services sector, potentially signaling future challenges for businesses and influencing Federal Reserve policy.
Consumer Spending Slows
Released: May 02, 2025 08:30
Preliminary data from the Chicago Fed's CARTS report indicate a concerning slowdown in consumer spending, with retail and food services sales (ex autos) experiencing a -0.2% MoM decline and a deceleration in YoY growth from 4.1% to 3.2%. This marks the second downturn in sales over the past four months, primarily driven by a significant drag from transaction data, though partially offset by a positive contribution from Census figures. Notably, prices are also falling, registering a -0.3% YoY change, which, when adjusted for inflation, translates to a -0.5% MoM contraction in real retail sales, suggesting waning consumer demand and potential headwinds for economic activity.
March Manufacturing Orders Show Mixed Signals
Released: May 02, 2025 10:00
March manufacturing new orders demonstrated robust overall growth, rising 4.3% MoM, though slightly undershooting forecasts and marking the best performance since July 2024. While durable goods orders led the expansion with a significant 9.2% MoM jump, excluding transportation, orders declined marginally, registering only 0.8% YoY. Shipment figures painted a mixed picture, with total manufactured goods shipments declining 0.1% MoM due largely to weakness in capital goods, despite gains in core capital goods and consumer goods. Inventories saw a modest increase of 0.1%, tempered by a notable decrease in auto inventories reflecting a surge in March buying.
Persistent Inflation & Easing Supply Bottlenecks
Released: May 02, 2025 11:00 - Link
April's S&P PMI data reveal a concerning picture of persistent inflationary pressures and nascent supply-side constraints for global manufacturers. The Global Price Pressures Index remained elevated at 1.2x, fueled by broad-based commodity price increases, most notably in semiconductors, electrical items, and stainless steel, suggesting weakening demand elasticity. While the Global Supply Shortages Index ticked up to 0.7x, driven by shortages in stainless steel and PVC, it remains below historical averages, partially offset by price declines in polyethylene and energy. Overall, the data points toward a delicate balance between continued price headwinds and a gradual easing of supply bottlenecks, warranting close monitoring in the coming months.
GDP Growth Forecast Revised Downward
Released: May 02, 2025 11:45
The New York Fed's latest Nowcast anticipates 2.34% GDP growth for Q2 2025, a notable 38 basis point decline reflecting lingering concerns about the economic trajectory. The surprisingly soft Q1 2025 reading, alongside weaker-than-expected data from the ISM Manufacturing index and ADP private payrolls, primarily drove the downward revision. While the BLS payrolls, real personal consumption expenditures, and upward pressure on PCE inflation provided offsetting positive influences, these were insufficient to counteract the impact of the initial Q1 weakness and subsequent disappointing data releases.
Other data releases and commentary:
Australia PPI: Q1 2025, Released: 05/01/2025 21:30
Disentangling supply-side and demand-side effects of uncertainty shocks on U.S. financial markets: Identification using prices of gold and oil, Released: 05/02/2025 05:00
The implications of US-China trade tensions for the euro area - lessons from the tariffs imposed by the first Trump Administration, Released: 05/02/2025 05:00
Economic Bulletin Issue 3, 2025, Released: 05/02/2025 05:00
Lifecycle analysis (LCA) and SAF sustainability, Released: 05/02/2025 06:00
Small Businesses are More and More Important, Released: 05/02/2025 07:00
Hard data, soft data, weird data, Released: 05/02/2025 12:00