Charting the Global Economy: US Jobs Surge; Taiwan Earthquake Impact
The gain boosts the chances Fed officials will further delay cutting interest rates from a two-decade high and consider fewer reductions this year than anticipated.
(Bloomberg) -- The US labor market defied projections again with the biggest jump in payrolls in nearly a year, increasing the likelihood that the Federal Reserve will delay interest-rate cuts.
On the other side of the world, the worst earthquake in Taiwan in 25 years briefly halted operations, but the semiconductor industry’s leading player expected to be back up and running fairly quickly. The country’s technological advancements appear to have kept damage and casualties relatively low.
In Argentina, President Javier Milei is in a race against time to bring inflation back down and hold on to his popularity. He’s recently taken a more pragmatic approach toward China, saying those relations haven’t changed “one bit” after previously vowing to curb those ties.
Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy, geopolitics and markets:
US
Payrolls advanced 303,000 last month following a combined 22,000 upward revision to job gains in the prior two months. The gain boosts the chances Fed officials will further delay cutting interest rates from a two-decade high and consider fewer reductions this year than anticipated.
The Congressional Budget Office warned in its latest projections that US federal government debt is on a path from 97% of GDP last year to 116% by 2034 — higher even than in World War II. The actual outlook is likely worse.
Ports along the US East Coast are modifying their operations to absorb cargo diverted from Baltimore harbor, where salvage specialists are starting the daunting task of clearing debris from the destroyed Francis Scott Key Bridge.
Asia
Taiwan’s semiconductor industry restarted operations and emergency personnel worked to help injured and trapped citizens as the island begins to recover from its worst earthquake in 25 years. Taiwan Semiconductor Manufacturing Co., the leading producer of advanced chips for Apple Inc. and Nvidia Corp., said it would resume production less than 24 hours after evacuating staff and halting operations. The company said there has been no damage to its most critical chip-making equipment from Wednesday’s 7.4 magnitude quake.
China’s factory activity beat expectations in March, boosting optimism about the country’s ability to achieve its ambitious growth goal of around 5% this year. The Caixin manufacturing purchasing managers’ index rose to 51.1 — above the 50 mark that indicates expansion for a fifth month, the longest streak in more than two years.
Developing economies of East Asia and the Pacific are set to see slowing growth, with higher-for-longer interest rates and worsening geopolitical tensions clouding the outlook for the region, the World Bank said.
Emerging Markets
Developing nations around the world are grappling with a choice of allegiance to the US or China on matters of trade, financing and security. Nowhere is that tougher than in Argentina. The South American country’s 276% inflation, history of sovereign bond defaults and six recessions over the last decade have made it more financially dependent on Beijing than any of its neighbors in Latin America, where the US has lost ground to China.
Since taking the reins in December, Argentina’s President Javier Milei has cut federal aid for local governments, devalued the peso, announced plans to terminate 70,000 state jobs and done away with price controls. But for all the economic pain that his “shock therapy” has unleashed on Argentines — annual inflation has soared to 276% — voter support is little changed from when he ascended to office. Now, Milei, who won with 56% of the vote in November, is in a race against time to bring inflation back down and hold on to that popularity.
Europe
Euro-area inflation slowed more than expected, cementing prospects for an interest-rate cut by the European Central Bank in June. The report adds to evidence that policymakers are on track to return inflation to the 2% target, allowing them to soon dial back some of the restriction needed after price gains surged into double digits.
World
Labor markets across most of the developed world just keep on beating expectations, pushing back bets on interest-rate cuts as hopes grow that central banks can pull off a soft landing after all. The reasons for the high demand for workers — an aging workforce, lack of skilled labor and companies hoarding staff — are holding firm even as economies start to slow.
Chile’s central bank slowed the pace of interest-rate cuts. Kenya held rates at a 12-year high, while Mauritius, Poland, Romania, India, Lesotho also left rates unchanged. Zimbabwe’s central bank announced a new currency backed by a basket of foreign currency and gold, which will be launched April 8.
--With assistance from Maeva Cousin (Economist), David Wilcox (Economist), Enda Curran, Katia Dmitrieva, Jonathan Gilbert, Claire Jiao, Linda Lew, John Liu, Yujing Liu, Brendan Murray, Jana Randow, Bhargavi Sakthivel (Economist), Zoe Schneeweiss, Kevin Simauchi, Manuela Tobias, Chien-Hua Wan, Fran Wang and Debby Wu.
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