Charting the Global Economy: US Job Growth Cools; Oil Up on OPEC

(Bloomberg) — The US job market moderated somewhat but still showed remarkable resilience even as other parts of the economy slowed, and OPEC+ announced a surprise cut in oil production.

A 236,000 increase in March payrolls followed stronger advances in the prior two months, and the US unemployment rate dropped near record lows. At the same time, annual wages rose at the slowest pace since June 2021.

While more tempered pay growth should help aid the Federal Reserve in its inflation fight, developments outside of the control of the US central bank, as well as its global counterparts, risk keeping price pressures elevated. OPEC+ members earlier in the week shocked markets with their announcement to reduce crude oil output in a bid to shore up prices.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

US

US payrolls rose at a firm pace last month with the unemployment rate dropping again near record lows, paving the way for the Fed to increase interest rates at its next meeting. The figures suggest that supply and demand of workers are coming more into balance, which, if sustained, could help moderate wage gains further.

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Applications for unemployment benefits last week signaled that the labor market still remains relatively strong, even though data revisions indicate some emerging signs of softening. Initial unemployment claims were 228,000 in the latest week. The government also revised up previous weeks’ numbers.

The economies in nearly half of US states barely grew or even shrank since the pandemic, underscoring the unevenness of the nation’s recovery. Gross domestic product was lower in 2022 in eight states including Louisiana and Hawaii that are dependent on tourism, migration shifts during the pandemic brought hundreds of thousands more people to Florida and Texas — which experienced the second- and third-largest economic growth, respectively.

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World

Central bankers who spent past weeks puzzling over how financial turmoil will impact their outlook now have a jolt in the form of higher oil prices to consider. The production cut announced by OPEC+ and the danger of another surge in crude costs complicates the debate in Frankfurt, London and Washington about where inflation is headed and how much further interest rates should rise to control it.

Israel’s central bank moderated the pace of its monetary tightening, acknowledging the potential risks to monetary policy from the government’s judicial plan. Sri Lanka held rates steady after securing a loan from the International Monetary Fund, while Australia, Romania, Chile, Poland and India also left borrowing costs unchanged.

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The US Treasury Department released its much-awaited guidance to clarify who can benefit from electric vehicle tax subsidies. Consumers can claim as much as $7,500 in federal tax credits if they buy a clean-energy vehicle that satisfies certain US rules regarding critical minerals and battery components. The rules are broadly aimed at diluting China’s market power over raw materials like lithium, cobalt, nickel and magnesium, which are key ingredients for electric motors and batteries.

Asia

China’s manufacturing activity unexpectedly eased in March, a private survey showed, leading a slide in factory gauges across Asia as the global economic outlook darkened.

Japan is poised to sharply raise its chip-gear spending in an attempt to boost its position in the global semiconductor market, as it tightens exports amid a US-led push to limit China’s tech ambitions. Japan is expected to spend $7 billion on fab equipment next year, which would mark a 82% jump from this year — the largest in the world — according to data from SEMI, a global association of chipmaking equipment producers.

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Europe

Europe’s battle with the worst cost-of-living crisis in a generation is far from over, and food is the latest focal point. Even as headline inflation starts to ease, the upward pressure on food prices remains firmly in place. That means a large chunk of household spending, the weekly supermarket trip, is rapidly getting more and more expensive.

Emerging Markets

Latin America and the Caribbean will experience only modest growth this year as the region’s economies suffer from high interest rates and falling commodity prices, the World Bank said in a report released Tuesday. The Washington-based organization projects that the regional economy as a whole will expand 1.4% through December, lagging all other regions.

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Argentina is bringing back a temporary exchange rate for soy exports in an elaborate bid to prop up the central bank’s dwindling cash reserves and ease the economic pain of a historic drought. It adds to the economy minister’s complex strategy to blunt the effects of a looming recession this year with inflation charging over 100%.

—With assistance from Philip Aldrick, Bryce Baschuk, Maria Eloisa Capurro, Agnieszka de Sousa, Ignacio Olivera Doll, Patrick Gillespie, Mackenzie Hawkins, Michelle Jamrisko, Sam Kim, Alessandra Migliaccio, Augusta Saraiva, Zoe Schneeweiss, Craig Stirling and Alex Tanzi.