Charting the Global Economy: U.S. Jobs Surprise to Upside
Central banks in the U.K., Brazil and Czech Republic were among those that raised borrowing costs to tame surging inflation.
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The U.S. economy last month added many more jobs than forecast, upping pressure on the Federal Reserve to hike interest rates.
Central banks in the U.K., Brazil and Czech Republic were among those that raised borrowing costs to tame surging inflation. Price increases in the euro-area accelerated to a record, while inflation in South Korea remained well above the central bank’s target.
New Zealand’s unemployment rate fell to a record low as labor shortages point to an economy that’s running hot and suggest monetary authorities will need to be more aggressive removing stimulus.
Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:
U.S.
The U.S. labor market showed unexpected strength last month despite record Covid-19 infections, extending momentum into the new year as surging wages added more pressure on the Federal Reserve to raise interest rates.
A record 50% of U.S. small-business owners said they raised compensation in January amid still-elevated job openings, the National Federation of Independent Business said Thursday.
Europe
The euro-area economy grew modestly in the fourth quarter amid another wave of surging coronavirus infections and curbs on activity. Gross domestic product rose 0.3% after a sharp contraction in output left Germany on the brink of recession. Meanwhile, a ramp-up in investment contributed to stronger-than-expected growth in France and Spain.
Euro-area inflation unexpectedly accelerated to a record, overshooting expectations by the most in at least two decades and fueling bets the European Central Bank could raise interest rates earlier than expected. Consumer prices jumped 5.1% from a year ago in January. The median estimate saw a reading of only 4.4% and none predicted inflation gaining pace.
Asia
New Zealand’s unemployment rate fell to a record low in the fourth quarter amid a labor shortage, adding to signs the economy is overheating. The Reserve Bank began raising its official cash rate in the fourth quarter and economists are forecasting the benchmark may need to be aggressively increased to take stimulus out of the economy.
South Korean consumer prices stayed well above the Bank of Korea’s target in January, keeping the pressure on policy makers to keep tightening as central banks around the world move to tamp down inflation.
Emerging Markets
Mexico became the second major Latin American economy to fall into recession last year, as supply chain shortages and lack of fiscal stimulus hurt activity. Latin America’s two-largest economies are now stalled, with Brazil’s shrinking in both the second and third quarters of 2021.
World
Central bankers in the U.K., Brazil, the Czech Republic, Armenia, Lesotho and the Dominican Republic raised interest rates this week, following peers in South America and eastern Europe to kick off the year by increasing borrowing costs to temper surging inflation. Meanwhile, the European Central Bank also made a hawkish pivot, no longer ruling out a hike this year, and Australia scrapped its bond-buying program.
Chile’s outgoing President Sebastian Pinera tapped Rosanna Costa as the nation’s first female central bank chief, putting her in charge of policy makers’ aggressive campaign against inflation. Globally, just over a dozen of central banks are headed by a woman.
Global food prices jumped toward a record last month, further adding to the surging cost of living for consumers. The United Nations’ index of prices rose 1.1% in January, pushed up by more expensive vegetable oils and dairy.
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