Modest Growth Recovery Continues
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Economics Research21 Jun 2024
  • Global: Market volatility in European markets arising from French political woes subside
  • Taiwan: CBC tightens credit controls to cool property market amid positive growth trajectory
  • Indonesia: Economy in transition leading up to handover of political leadership
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US: Global: Market jitters over French politics subside, BOE keeps rate unchanged at 16-year high. With anxiety subsiding over political uncertainties in France, attention turned towards US advanced retail sales, which rose 0.1% m/m sa in April, significantly lower than the 0.3% expected. March’s figure was also revised to -0.2% from its previous estimate of 0%. Excluding autos, retail sales declined a second month in May, at the same pace of 0.1% m/m as in April. On the other hand, US industrial production increased in May, helped by a broad-based pickup in factory output in a positive sign for a manufacturing sector that has been struggling for momentum. Manufacturing output also climbed 0.9%, led by consumer goods, after a revised 0.4% April decrease. Output at utilities jumped 1.6%. Post-FOMC, interest rate futures see the Fed lowering rates twice this year in September and December, brushing aside comments by Fed officials who favoured one or no cuts.

Next week, US PCE deflators are expected to mirror the slower CPI inflation in May. Following the next nonfarm payrolls report on 5 July, Fed Chair Jerome Powell’s semi-annual testimony on monetary policy to the US Senate Banking Committee on 9 July will likely set the tone as to whether the Fed will pave the ground at the Federal Open Market Committee (FOMC) meeting on 31 July for a rate cut at the 18 September meeting.

As expected, the Bank of England (BOE) kept rates unchanged at 5.25% ahead of snap elections in the UK, despite the UK’s CPI inflation hitting the 2% target in May for the first time in three years. CPI core and services inflation remained at 3.5% and 5.7%, respectively, with average weekly earnings also staying elevated for a second month at 5.9% y/y in April. Notably, the UK economy exited its technical recession with its highest GDP growth rate (0.6% q/q sa in 1Q24) since 4Q21.

Figure 1: US industrial production rises more than expected

Source: LSEG Datastream, DBS




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